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THE HANDBOOK SERIES 



PROBLEMS OF LABOR 



THE HANDBOOK SER 


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Americanization 


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European War. Vol. II 




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THE HANDBOOK SERIES 



SELECTED ARTICLES ON 



PROBLEMS OF LABOR 



COMPILED AND EDITED BY 

DANIEL BLOOMFIELD 

Author of "Labor Maintenance/' Partner, Bloomfield and Bloom- 
field, Boston, Consultants in Employment Management 
and Industrial Relations. 

WITH AN INTRODUCTION BY 

MEYER BLOOMFIELD 

Author of "Labor and Compensation/' "Youth, School and Vocation/' 
"Management and Men/' Etc. 



THE H. W. WILSON COMPANY 

NEW YORK 

1920 



&>/£ 



Published March, 1920 



EXPLANATORY NOTE 

The literature concerning the problems of labor is volumin- 
ous and recently there has been published in periodicals, books 
and reports, a good deal of excellent material which throws 
much light on these problems. It is the purpose of the com- 
piler and editor of this handbook to present the best of this 
recent material in as concise a form as it is possible to adopt 
in a single volume. 

The problems of labor are many and it would take several 
volumes to cover the subjects in full detail. This handbook is 
a summary which will prove useful as a guide for all students 
of industrial relations. 

When used with the handbooks on Employment Manage- 
ment, Modern Industrial Movements and the others in the 
series dealing with labor, the reader will find he has the nucleus 
of an industrial library with the best thought on the subject 
made easily available. 

Daniel Bloom field. 
January 22, 1920. 






CONTENTS 

PAGE 

Bibliography xi 

Introduction by Meyer Bloomfield i 

General 

Post, Louis F. The Central Problems Everybodys' 5 

Fundamentals of the Industrial Problem 

Garton Foundation Report 7 

Labor's Bill of Rights #7 

Causes of Friction and Unrest 

Rowntree, B. Seebohm. Labor's Industrial Demands 

Christian Science Monitor 35 

What's Wrong With Industry ? Living Age 39 

Frey, John P. What Labor Really Wants Metropolitan 42 

What Does Labor Want ? Nation 47 

Cost of Living 

Taussig, Frank W. Cost of Living and Wages Collier's 51 

Ogburn, W 7 . F. Measurement of Cost of Living and W'ages 

Annals of the American Academy 50 

Price, Theodore H. The Index Number Wage. . . . Outlook 08 

Methods of Compensation 

(a) Wage Methods and Bonuses 

Stone, N. I. Wages, Hours, and Individual Output 

Annals of the American Academy 77 

Fitch, John A. Stretching the Pay Envelope Survey Q7 

Wisler, William. Wages and Some Industrial Fallacies 

American Federationist 102 

Payment by Results New Statesman 109 

(b) Profit Sharing 

Perkins, George W. Profit Sharing Current Affairs m 

Dennison, Henry S. Why I Believe in Profit Sharing 

Factory 1 20 

Eliot, Charles W. Road Toward Industrial Peace 

New York Times 123 



yiii CONTENTS 

PAGE 

The Profit Sharing Fallacy. . .International Steam Engineer 133 

(c) Minimum Wage 
Webb, Sidney. Economic Theory of a Legal Minimum 

Wage Journal of Political Economy 135 

Hours of Work 

(a) The Shorter Work-Day 

Morrison, C. J. The Eight-Hour Day 

Engineering Magazine 139 

Labor's Views on the Shorter Workday 

American Federationist 143 

Executive Council of the American Federation of Labor on 

the Shorter Workday American Federationist 146 

Trades with the 44-Hour W'eek Industrial Relations 147 

Feiss, Richard A. Maximum vs. Minimum Hour Legislation 

Annals of the American Academy 150 

Fitch, John A. Where Time Is Money Survey 153 

Cole, G. D. H. The Hours Movement in England 

New Republic 158 

Leverhulme, Lord. The Six Hour Day 161 

The Six Hours Day Nation 164 

(b) Night Work 

The Baking Trade Month's Work 167 

Tenure of Employment 

Ross, Edward A. A Dismissal Wage Independent 171 

Meeker, Royal. Unemp^ment and Health Insurance 175 

Program of New York State Reconstruction Commission.. 

Monthly Labor Review 180 

Trade Unionism 

Proportion of the Organized Amalgamated Journal 185 

The Employer's Viewpoint U. S. Industrial Commission 187 

Laughlin, J. Laurence. Capitalism and Social Discontent 

North American Review 203 

Taft, William Howard. Collective Bargaining 212 

Hobson, J. A. Ethics of Collective Bargaining. .Standard 215 
Wolman, Leo. Collective Bargaining in the Glass Bottle 

Industry American Economic Review 7 220 

Gary, Elbert H. Present Industrial Issues 236 

Barr, William H. The Open Shop 243 



CONTENTS ix 

PAGE 

Facts About the Non-Union Shop 

International Molders' Journal 243 

Hoagland, H. E. Closed Shop versus Open Shop 

American Economic Review 245 

Stoddard, Lothrop. The Common People's Union 

World's Work 255 

Union Label Amalgamated Journal 261 

Brandeis, Louis D. The Incorporation of Trades Unions. . 262 

Labor Disputes and Adjustment 

The Cause of Strikes New Statesman 269 

Beeby, George. The Australian System of Dealing with 

Labor Disputes Survey 272 

Howard, Earl D. The Development of Government in 

Industry Illinois Law Review 278 

Frey, John P. The Question of Trade Jurisdiction 

Amalgamated Journal 286 

Groat, George G. Attitude of the Courts Towards Industrial 

Problems Annals of the American Academy 290 

Limitation of Output 

Gompers, Samuel. Who Limits Output ? 

International Molders' Journal 301 

Bell, George L. Production the Goal ; 

Annals of the American Academy 306 

Industrial Insurance 

Schereschewsky, J. W. Industrial Insurance 313 

Lapp, John A. Health Insurance 316 

Kimball, H. W. Group Insurance. .Industrial Management 324 
Meeker, Royal. Social Insurance in the United States 331 

Housing 

Ihlder, John. Housing and Transportation Problems in 

Relation to Labor Placement 

Annals of the American Academy 339 

Woll, Matthew. Labor's Attitude on Housing 342 

Methods of Promoting Industrial Peace 

President's Industrial Conference 349 



x CONTENTS 

PAGE 

Sullivan, J. W. Trade Union Solution of the Clash of 

Rights International Molders' Journal 359 

Proposals of President's Second Industrial Conference.... 362 

Rockefeller John D., Jr. A New Industrial Creed 

Current Affairs 368 

Fisher, Irving. How Can the Employer Help the Worker 

Satisfy His Fundamental Human Instincts ?.... Survey 376 

New Labor Code of the World Survey 378 

Commons, John R. Bringing About Industrial Peace.... 396 

Occupational Hygiene 

Newman, Bernard J. Industrial Losses 

American i* ecerationist 41.5 

Lee, Frederic S. Industrial Physiology, A New Science... 410 

Women in Industry 

Van Kleeck, Mary A. The New Spirit in Indust r > 419 

Standards Governing the Employment of Women hi Industry 430 

Index . * » . 43b 



BIBLIOGRAPHY 

General 

Academy of Political Science (N. Y.). Proceedings: Vol. 7- 

No. I. 1917. Labor disputes and public service corporations. 
Adams, T. S., and Sumner, Helen I. Labor problems. Mac- 

millan. 1905. 
Annals of the American Academy. Vol. 69. 191 7. Present labor 

situation. 
Annals of the American Academy. 81 : 151-62. Ja. '19. Capital 

and labor. C. M. Schwab. 
Annals of the American Academy. 81 : 163-6. Ja. '19. Post war 

standards for industrial relations. H. P. Kendall. 
Atlantic Monthly. 123: 483-90. Ap. '19. Immigration and the 

labor supply. D. D. Lescohier. 
Bloomfield, Meyer. Management and men. Century. 1919. 
Booth, C. Industrial unrest and trade union policy. Macmillan. 

1914. 
Brandeis, Louis D. Business — a profession. Small, Maynard. 

1914. 
Century. 98: 73-88. My. '19. Industrial politics: the next step 

in industrial relations. G. Frank. 
Cohen, Julius Henry. An American labor policy. Macmillan. 

1919. 
Commons, John R. Labor and administration. Macmillan. 1914. 
Commons, John R., and Andrews, John B. Principles of labor 

legislation. Harpers. 1916. 
Contemporary Review. 115: 361-8. Ap. '19. Industrial unrest, 

a new policy required. A. Henderson. 
Edinburgh Review. 229: 232-52. Ap. '19. Problem of the age. 

A. Shadwell. 
Edinburgh Review. 229: 326-44. Ap. '19. Economic fallacy in 

industry. Lynden Macassey. 
Everybody's. 40: 60. F. '19. Central problems. L. F. Post. 

Reprinted in this Handbook. See page 5. 
Forum. 61: 178-88. F. '19. Four partners in industry. J. D. 

Rockefeller. 



xii BIBLIOGRAPHY 

Forum. 61 : 600-10. My. '19. Our labor problems. W. B. 
Wilson. 

Kelley, Florence. Modern industry — in relation to the family, 
health, education and morality. Longmans. 1914. 

Living Age. 281 : 37-42. Industrial unrest. W. H. S. Aubrey. 

Living Age. 299: 588-600. D. 7, '18. What's wrong with in- 
dustry ? 
Reprinted in this Handbook. See page 39. 

Living Age. 300: 705-10. Mr. 22, '19. Causes and remedies of 

labor unrest. D. Lloyd George. 

Nineteenth Century. 85 : 876-88. My. '19. Is civilization com- 
mitting suicide? F. Gribble. 

Nineteenth Century. 85: 1146-64. Je. '19. Labour unrest: its 
causes and its permanent cure. J. E. Barker. 

North American Review. 203: 403-12. Mr. '16. Capitalism and 
social discontent. J. Lawrence Laughlin. 
Reprinted in this Handbook. See page 203. 

Outlook. 120: 617-19. D. 18, '18. Industrial injustice; five pro- 
posed remedies. 

Simkhovitch, M. M. The city worker's world in America. 
Macmillan. 1917. 

Spectator. 117: 281-2. S. 9, '16. Labour and democracy. 

Spectator. 119: 377-8. O. 13, '17. The problem of industrial 
unrest. 

Spectator. 121 : 329-30. S. 28, '18. Foundation of industrial 
peace. T. E. Jackson. 

Survey. 33: 284-8. D. 12, '14. Summing up our industrial re- 
lations: the preliminary report [of the U. S. Commission on 
industrial relations]. 

United States. Commission on Industrial Relations. Senate 
Document. No. 415. Washington, 1916. 

Webb, S. B. Problems of modern industry. Longmans. 1913. 

Cost of Living 

Academy of Political Science (N. Y.) Proceedings. 8: 235-42. 
F. '19. Standard of living as a basis for wage adjustments. 
W. F. Ogburn. 

Annals of the American Academy. 81 : 110-22. Ja. '19. Mea- 
surement of the cost of living and wages. W. F. Ogburn. 

Reprinted in this Handbook. See page 56. 
Forum. 52: 49-59. Jl. '14. Sociological view of the high cost 

of living. H. P. Fairchild. 
Literary Digest. 61: no. Je. 28, '19. Rising living costs and 

rising incomes during four war years. 



BIBLIOGRAPHY xiii 

New Republic. 20: 192-3. S. 17, '19. Production and cost of 

living. 
New Republic. 20: 221-3. S. 24, '19. To stabilize the living 

wage. 
New Statesman. 12: 66-7. 0. 26, '18. Wages and the cost of 

living. 
Outlook. 121: 742-3. Ap. 30, '19. Index number wage; a scientific 

method for adjusting wages to the cost of living. T. H. 

Price. 

Reprinted in this Handbook. See page 68. 
Outlook. 122: 335. Je. 25, '19. High cost of living. T. H. Price. 

Public. 22: 246. Ap. 26, '19. Shrinking dollar. 

Scientific American, no: 247-8. Mr. 21, '14. Rise in prices 

and the increased cost of living. John B. C. Kershaw. 
Survey. 41 : 737-8. F. 22, '19. Adjusting wages to the cost of 

living. 
Streightoff, F. H. Standard of living among the industrial 

people of America. Houghton Mifflin. 1915. 
World's Work. 38: 576-7. O. '19. Work and thrift as cure for 

high prices. 

Methods of Compensation 

American Economic Review. 9: 701-38. D. '19. American 
minimum wage laws at work. Dorothy W. Douglas. 

Annals of the American Academy. 81 : 123-9. Ja. '19. Wages 
for women workers. M. Anderson. 

Annals of the American Academy. 85: 120-45. S. '19. Wages, 
hours and individual output. N. I. Stone. 

Reprinted in this Handbook. See page 77. 

Atlantic Monthly. 124: 408-19 S. '19. How the tariff affects 
wages. F. W. Taussig. 

Contemporary Review. 106: 203-8. Ag. '14. Right to a living 
wage. J. V. Bartlett. 

Edinburgh Review. 229: 1-18. Ja. '19. Profit sharing in agri- 
culture. 

Everybody's. 30: 462-74. Ap. '14. Henry Ford's experiment 
in good will. G. Garrett. 

Independent. 97: 365-6. Mr. 15, '19. Legal dismissal wage. 
E. A. Ross. 

Reprinted in this Handbook. See page 171. 

Industrial Management. 57: 296-8. Ap. '19. Profit sharing plan 

for executives. A. P. Ball. 
Industrial Management. 57: 437-8. Je. '19. Profit sharing— 

acceptability and possibilities. G. E. Holmes. 



/> 



xiv BIBLIOGRAPHY 

Industrial Management. 58: 42-5. Jl. '19. Fallacy of the em- 
ployee's profit sharing as a reward for labor. P. L. Burk- 
hard. 

Journal of Home Economics. 11: 270-2. Je. '19. Wages and 
the cost of living in New York City and Brooklyn. 

Journal of Political Economy. 20: 973-98. D. '12. Economic 
theory of a legal minimum wage. Sidney Webb. 
Reprinted in this Handbook. See page 135. 

Journal of Political Economy. 27 ': 421-56. Je. '19. Work of the 

wage-adjustment boards. A. M. Bing. 
Ladies' Home Journal. 36: 39. Ap. '19. Should a woman get 

man's pay? E. N. Blair. 
Nineteenth Century. 85: 1146-64. Je. '19. Labour unrest: its 

causes and its permanent cure. J. E. Barker. 
Outlook. 106: 627-31. Mr. 21, '14. Profit sharing. A discus- 
sion of the Ford plan. (1) Its defects. G. M. Verity. (2) 

Its merits. L. G. Abbott. 
Outlook. 108: 1016-18. D. 30, '14. Profit sharing not a dream. 

E. H. Gaunt. 
Outlook. 123: 206-8. O. 1, '19. Time to call a halt to organized 

labor. R. Spillane. 
Reely, Mary K. Selected articles on the minimum wage. H. W. 

Wilson Co. N. Y. 1917. 
Ryan, J. A. A living wage. Macmillan. 1900. 
Survey. 41 : 905. Mr. 22, '19. Stabilizing industry by wage 

zones. 
System. 25: 604-9. J e - *I4- Paying more than wages. G. L. 

Louis. 
U. S. Bureau of Labor Statistics. Bulletin 146. Ap. 28, '14. 

Wages and regularity of employment and standardization 

of piece rates in the dress and waist industry of New York 

City. N. I. Stone. 
World's Work. 28: 316-20. Jl. '14. Profit sharing for savings. 

W. C. Procter's successful plan. J. R. Rankin. 
World's Work. 38: 625-32. O. '19. Wages and profit-sharing 

delusions. I. Crowther. 

Hours of Work 

American Federationist. 21: 1 12-14. F. '14. Trend to eight-hour 
day. F. J. Calvert. 

American Labor Legislation Review. 7: 155-67. Mr. '17. Eight- 
hour day and six-day week in the continuous industries. 
W. B. Dickson. 



BIBLIOGRAPHY xv 

Annals of the American Academy. 83: 202-32. My. '19. Hours 

of labor in foreign countries. L. Magnusson. 
Goldmark, Josephine. Fatigue and efficiency. Russell Sage 

Foundation, N. Y. 1912. 
Literary Digest. 60: 121-4. Mr. 15, '19. What is an eight-hour 

day? 
New Republic. 18: 7-9. F. 1, '19. Forty- four hour week. 
New Republic. 18: 247-9. Mr. 22, '19. Hours movement in 

England. G. D. H. Cole. 

Reprinted in this Handbook. See page 158. 

New Statesman. 12: 540. Mr. 22, '19. Coal situation. 

Public. 22: 701-2. Je. 5, '19. Six hour day. 

Quarterly Journal of Economics. 33: 555-9- My. '19. Peculiar 
eight-hour problem affecting longshore labor. W. Z. Ripley. 

Science, n. s. 49 : 424-5. My. 2, '19. Physiology of the working 
day. 

Spectator. 122:258-9. Mr. 1, '19. Labour demands in the coal 
trade. 

U. S. Bureau of Labor Statistics Bulletin. No. 221. April, 1917. 
Hours, fatigue, and health in British munition factories. 

U. S. Bureau of Labor Statistics Bulletin. No. 230. 1917. In- 
dustrial efficiency and fatigue in British munition factories. 

Tenure of Employment 

American Labor Legislation Review. 4: 294-9. My. '14. The 
struggle against unemployment. C. R. Henderson. 

American Labor Legislation Review. 5 : 184-9. ^S- Regulari- 
zation of industry. 

Andrews, Irene O. Relation of irregular employment to the 
living wage for women. American Association for Labor 
Legislation. N. Y. 1915. 

Beveridge, W. H. Unemployment. Longmans. 1918. 

Harper's Magazine. 131 : 70-2. Je. '15. Unemployment and 
business. Elbert H. Gary. 

Kellor, Frances A. Out of work. Putnam. 1915. 

Lescohier, Don D. Labor market. Macmillan. 1919. 

Monthly Labor Review (U. S. Bureau of Labor Statistics.), 
p. 10-29. Ag. '18. Labor Survey of Cleveland Cloak industry. 
Boris Emmet. 

Monthly Labor Review (U. S. Bureau of Labor Statistics). 9: 
245-8. N. '19. A permanent program for stabilizing employ- 
ment in New York State. 

Reprinted in this Handbook. See page 180. 



xvi BIBLIOGRAPHY 

Rowntree, B. Seebohm. The way to industrial peace and the 
problem of unemployment. Unwin. London. 1914. 

Survey. 31 : 541-2. F. 7, '14. The crying need for connecting 
up the man and the job. Frances A. Kellor. 

Survey. 33: 48-50. O. 10, '14. Unemployment and public re- 
sponsibility. C. S. Barnes. 

Trade Unionism 

Academy of Political and Social Science (N, Y.) Proceedings. 
8: 211-18. F. '19. Collective bargaining, the democracy of 
industry. R. J. Caldwell. 

American Economic Review. 6: 549-67. S. '16. Collective bar- 
gaining in the glass-bottle industry. Leo Wolman. 

Reprinted in this Handbook. See page 220. 
American Economic Review. 8: 752-62. D. '18. Closed shop 

versus open shop. H. E. Hoagland. 
Reprinted in this Handbook. See page 245. 
American Federationist. 21 : 537-48, 621-35. Jl.-Ag. '14. The 

American labor movement; its makeup, achievements and 
aspirations. Samuel Gompers. 

American Industries. 14: 12-13. My. '14. What collective bar- 
gaining means. James A. Emery. 

American Industries. 14: 21-3. O. '14. Labor monopoly, the 
arch-enemy of industry. H. G. Otis. 

American Industries. 14: 12-15. D. '14. Labor combinations 
and the Clayton act. J. A. Emery. 

American Journal of Sociology. 19: 753-60. My. '14. Func- 
tional industrial relationships and the wage rate. P. L. Vogt. 

American Journal of Sociology. 20: 170-80. S. '14. Professor 
Hoxie's interpretation of trade unionism. E. H. Downey. 

American Law Review. 51 : 801-32. N. '17. Power and duty 
of the state to settle disputes between employer and em- 
ployees. G. S. Ramsay. 

Annals of the American Academy. 69: 214-22. Ja. '17. Shall 
free collective bargaining be maintained. C. H. Mote. 

Annals of the American Academy. 85 : 166-79. S. $1 9- Labor 
agreements with a powerful union. J. M. Moses. 

Annals of the American Academy. 85 : 214-19. S. '19. The or- 
ganization of an open shop under the Midvale plan. E. 
Wilson. 

Fortnightly Review. 101 : 893-904. My. '14. Industrial unrest 
from labour's standpoint. Frank Smith. 

Also in Living Age. 281: 771-9. Je. 27, '14. 



BIBLIOGRAPHY xvii 

Forum. 62: 513+. D. '19. The closed shop — to the bar. 
Groat, G. G. Introduction to the study of organized labor. 

Macmillan. 1916. 
Hoxie, R. F. Trade unionism in the United States. Appletoa. 

1917. 

Independent. 79: 182-3. Ag. 3, '14. Union unionism. G. Doug- 
las Wardrop. 

Marot, Helen. American labor unions. Holt. 1914. 

Nineteenth Century. 19: 812-23. N. '19. The grave industrial 
problem: output and reward. Leslie Scott. 

Political Science Quarterly. 33: 396-439. S. '18. Collective bar- 
gaining before the Supreme court. T. R. Powell. 

Public. 22: 895-6. Ag. 23, '19. Unionizing the profession. 

Quarterly Journal of Economics. 26: 425-43. My. '12. National 
and district systems of collective bargaining in the United 
States. G. E. Barnett. 

Review of Reviews. 60: 441-2. O. '19. Trade union college. 

Review. 1 : 678-9. D. 20, '19. Labor not a commodity. J. 
Laurence Laughlin. 

Robbins, E. C. Selected articles on the open versus closed 
shop. H. W. Wilson Co. N. Y. 1912. 

Science, n. s. 49: 487-9. My. 23, '19. Union of scientific federal 
employees. R. H. True and P. G. Agnew. 

Survey. 32: 360. Jl. 4, '14. The Clayton bill and organized 
labor. Edwin Witte. 

Survey. 32: 632-3. S. 26, '14. The way of the transgressor in a 
closed shop city. J. A. Fitch. 

Survey. 33 : 191-3. N. 21, '14. The changing American Federa- 
tion of Labor. F. T. Carlton. 

Survey. 41 : 857. Mr. 15, '19. International charter of labor. 

U. S. Bureau of Labor Statistics. Bulletin 144. Industrial court 
of the cloak, suit and skirt industry of New York City. 
C. H. Winslow. 

Unpopular Review. 5: 254-74. Ap. '16. Organized labour and 
democracy. W. G. Merritt. 

Webb, Sidney and Beatrice. Industrial democracy. Longmans. 
1902. 

Labor Disputes and Adjustment 

Academy of Political Science. (N. Y.) Proceedings. Vol. 7. 

no. 1. 1917. Labor disputes and public service corporations. 
Barnett, G. E. and McCabe, D. A. Mediation, investigation and 

arbitration in industrial disputes. 1916. 



/ 



xviii BIBLIOGRAPHY 

Cohen, Julius Henry. Law and order in industry. Macmillan. 

1916. 
Contemporary Review. 116: 496-503. N. '19. Labour unrest 

and the need for a national ideal. B. Seebohm Rowntree. 
Laidler, H. W. Boycotts and the labor struggle. Appleton. 1913. 
Literary Digest. 63: 14-15. N. 29, '19. Labor's right to strike. 
Mote, C. H. Industrial arbitration. Bobbs-Merrill. 1916. 
North American Review. 200: 35-44. Jl. '14. The Colorado 

strike. E. M. Ammons. 
Survey. 32 1304-5. Je. 13, '14. T!ie clcscd shop and the labor 

boycott. H. W. Laidler. 
Survey. 32: 397-99. Jl. 11, '14. Collective bargaining and in- 
dustrial unrest. J. A. Fitch. 
Survey. 42: 399-401. Je. 7, '19. Australian system of dealing 

with labor disputes. G. Beeby. 

Reprinted in this Handbook. See page 272. 
Survey. 43: 53-56, 86, 91. N. 8, '19. The closed shops and 

other industrial issues of the steel strike. J. A. Fitch. 
U. S. Bureau of Labor Statistics. Bulletin Whole No. 2^. July 

1918. Operation of the Industrial Disputes Act of Canada. 

B. M. Squires. 

Industrial Insurance 

American Economic Review. 5 : 221-78. Je. '15. Field of work- 
men's compensation in United States. W. C. Fisher. 

Academy of Political Science. (N. Y.) Proceedings. 8: 286-90. 
F. '19. Government's responsibility for disabled industrial 
workers. T. B. Love. 

American Labor Legislation Review. 4: 47-72. Mr. '14. The 
practicability of compulsory sickness insurance in America. 
J. P. Chamberlain. 

American Labor Legislation Review. 4: 82-91. Mr. '14. Trade 
union sickness insurance. J. M. Lynch. 

American Labor Legislation Review. 5 : 265-78. Je. '15. Un- 
employment insurance. O. S. Halsey. 

American Labor Legislation Review. 6: 123-6. Je. '16. Is 
health insurance paternalism? W. Hard. 

American Labor Legislation Review. 6: 155-236. Je. '16. Brief 
for health insurance. 

American Labor Legislation Review. 6: 174-85. Je. '16. Meet- 
ing the wage loss due to illness. 

American Labor Legislation Review. 9: 107-14. Mr. '19. Next 
step in social insurance in United States. 



BIBLIOGRAPHY xix 

American Journal of Public Health. 8: 883-7. D. '18. Rela- 
tion of wages to the public health. B. S. Warren and E. 
Sydenstricker. 

American Journal of Public Health. 8: 943"4- D- '18. Health 
insurance from its medical and hospital aspects. J. A. 
Lapp. 

Gibbon, I. G. Unemployment insurance. King. London. 191 1. 

Independent. 96: 445-7. D. 28, '18. Group insurance stabilizes 
labor. W. E. Underwood. 

Industrial Management. 57: 154-6. F. '19. Group insurance. 
H. W. Kimball. 
Reprinted in this Handbook. See page 324. 

National Conference of Charities and Correction. Proceedings 

Fort Wayne Ind. 1914: 346-55. American problems in social 

insurance. F. L. Hoffman. 
National Conference of Charities and Correction. Proceedings. 

Fort Wayne, Ind. 1914: 355-9. The right of the worker to 

social protection. C. R. Henderson. 
Nineteenth Century. 85: 862-75. My. '19. Right to idle. J. A. 

R. Marriott. 
North American Review. 209: 490-8. Ap. , I9. Compulsory 

health insurance. H. Cheney. 
Rubinow, I. M. Social insurance. Holt. 1914. 
Survey. 32: 23-8. O. 3, '14. The new stage in compensation. 

W. Benedict. 
Survey. 42 : 249. My. 10, '19. Insurance and doles. 

Housing 

American City. 20: 23-5. Ja. '19. Housing the workers — an 
unfinished job. G. Gore. 

Annals of the American Academy. Vol. 51. No. 1. Ja. '14. Hous- 
ing and town planning. 

Annals of the American Academy. 81 : 51-5. Ja. '19. Housing 
and transportation problems in relation to labor placement. 
John Ihlder. 
Reprinted in this Handbook. See page 339. 

Architectural Record. 45: 21-5. Ja. '19. United States housing 
corporation. 

Architectural Record. 45: 123-41. F. '19. Government's hous- 
ing at Bridgeport, Conn. 

Architectural Record. 45: 567-72. Je. '19. Future of industrial 
housing. S. Baxter. 

Bankers Magazine. 96: 248-9. F. '18. Problem of industrial 
housing. N. F. Hoggson. 



xx BIBLIOGRAPHY 

Columbia University Quarterly. 21 : 147-52. Ap. '19. Industrial 

housing. 
Forum. 51: 111-14. Ja. '14. Cost of a decent home. C. Arono- 

vici. 
Hibbert Journal. 17: 387-90. Ap. '19. Worker on his home. 
House Beautiful. 44: 379-81. D. '18. Greatest landlord in 

America; Yorkship Village near Camden, N. J. C. W. 

Moores. 
Literary Digest. 60: 22-3. Mr. 15, '19. England's housing plans. 
Nation. 98: 76-7. Ja. 22, '14. First garden city. Letch worth. 
New Statesman. 13 : 7-8. Ap. 5, '19. Housing of the people. 
Public. 22: 155-7. F. 15, '19. Housing issue in the United 

States. C. H. Whitaker. 
Public. 2.2'. 649. Je. 21, '19. Housing solution. 
Scientific American. 120: 4. Ja. 4, '19. Factory and the home. 
Survey. 41 : 585-92. F. 1, '19. Government's model village. 

R. S. Childs. 
Survey. 42: 152-4. Ap. 26, '19. Housing workers in a powder 

plant. 
Survey. 42: 341. My. 31, '19. Housing in a reconstruction 

program. R. D. Kolm. 

Women in Industry 

Academy of Political Science (N. Y.) Proceedings. 8: 139-40. 
F. '19. Women in industry. M. E. Dreier. 

American Journal of Public Health. 9: 367-8. My. '19. Med- 
ical argument against night work especially for women em- 
ployees. E. R. Hayhurst. 

American Journal of Sociology. 24: 528-65. Mr. '19. Probable 
economic future of American women. D. Snedden. 

Annals of the American Academy. 81 : 123-9. Ja. '19. Wages 
for women workers. M. Anderson. 

Bennett, Helen M. Women and work. Appleton. 1917. 

Coal Age. 12: 888-9. N. 24, '17. Women in industry. Alex- 
ander Moss. 

Dial. 67: 45-7. Jl. 26, '19. Women in British industry. G. D. H. 
Cole. 

Fortnightly Review, ill : 63-76. Ja. '19. Equal pay for equal 
work. G. M. Tuckwell. 

Iron Age. 101 : 206-10. Ja. 17, *i8. Women's labor in British 
war industries. L. H. Quin. 

Ladies' Home Journal. 36:39. Ap. '19. Should a woman get a 
man's pay. E. N. Blair. 



BIBLIOGRAPHY xxi 

Ladies' Home journal. 36: 55-6. Ap. '19. The English wo- 
man who worked. M. Bloomfield. 

Ladies' Home Journal. 36:51-2. My. '19. What the Englhk 
working woman has proved. M. Bloomfield. 

Ladies' Home Journal. 36: 47-8. Je. '19. The Englishwomaa 
after the war. M. Bloomfield. 

Literary Digest. 62: 74. Jl. 19, '19. Limitations of womas 
workers. 

Nineteenth Century. 76: 384-93. Ag. '14. Women's wages and 
the laws of supply and demand. E. Gore-Booth. 

Quarterly Review. 232: 73-89. Jl. '19. Economic future of wo- 
men in industry. L. Macassey. 

Schreiner, Olive. Woman and labour. Unwin. London. 1914. 

Scribner's Magazine. 65: 113-16. Ja. '19. Women and heavy 
war work. W. G. Thompson. 

Survey. 41 : 868-9. Mr. 15, '19. Women workers' platform. 

U. S. Bureau of Labor Statistics. Bulletin. No. 175. Summary 
of report on condition of women and child wage earners in 
the United States. 

U. S. Bureau of Labor Statistics. Bulletin. No. 22^. 191 7. Em- 
ployment of women and juveniles in Great Britain during tke 
war. 



SELECTED ARTICLES ON 
PROBLEMS OF LABOR 

INTRODUCTION 

The aim of this volume is to present a useful and well- 
organized body of material dealing with the principal topics in 
what we have commonly learned to style the labor problem. 

The title of this book, it will be noticed, is not the Labor 
Problem, but the Problems of Labor. And in this circumstance 
(it is not an accident) lies an important suggestion. 

Careful observers of labor conditions know that there is no 
such thing as a simple labor problem. There are labor prob- 
lems. These problems are many, but they lend themselves to a 
certain degree of definite grouping. 

Now without some attempt at analytical grouping or an ar- 
rangement of the main topics of importance in this field, there 
is the danger, as is frequently manifest in public discussion of 
the subject, of a confusion of terms. One man speaks on the 
"Labor Problem," and he deals with just one phase of trade 
union activity. To his mind, that sums up the labor problem 
as he sees it, but his auditors remain unsatisfied. Another, on 
the same subject, deals only with one phase of a possible "solu- 
tion" of the labor situation. In the absence of clean-cut defini- 
tion of terms to start with he goes on to present what is 
dangerously like a panacea. 

No man who is aware of the manifold phases of the labor 
situation could lend himself* to the advocacy of specifics in in- 
dustrial matters. Simple remedies in labor relations are for the 
simple minded who view the action taking place through a knot- 
hole in the fence; they won't do, for those who pay the price 
of admission and get a full view of the complications and many 
sided aspects of the matter. 

The price of admission, it should be said, is earnest study of 
the subject, a willingness to spend time and energy on it, and a 



2 SELECTED ARTICLES 

realization of its overshadowing importance. It is this im- 
portance which justifies the very best attention and study that 
can be given, and condemns in advance oversimplified, proprie- 
tory schemes advertised as sure remedies for industrial ills. 

A most encouraging fact in the present situation as it affects 
our country is the large and growing number of industrial execu- 
tives, and students of labor questions who have definitely turned 
their backs on panaceas and are approaching all industrial ques- 
tions with what might be called the engineering sense. By this 
I mean that attitude of mind which believes that all decision and 
action must be founded on carefully organized data, on as- 
semblage of the best available material and information, and on 
a reasonably close acquaintance with the successes and failures 
that have attended various experiments in labor relations. 

Equipped with such knowledge, the field of labor problems, 
takes on a new meaning. 

A wide range of interests opens up, more than one method 
or formula seems to be feasible. There is a challenge to re- 
sourcefulness, human insight, and constructive imagination. 
Capable executives welcome such a call on their intelligence. 
There is something in it of that quality that they have learned 
to meet in other phases of their administrative work. They have 
made up their minds, being men of capacity, that dealing with 
questions of human nature in industrial organization could not 
be an easier task than settling any other problems in their busi- 
ness experience. 

So with a grasp of the size of their job, they turn to serious 
study of its elements. And this indeed is the typical attitude 
of, all earnest students of labor problems whether their field be 
academic, or industrial and commercial. They distrust glibness, 
facile prospectus, specious cure — also — they hold fast to the 
hard realities the chief ot which is persistent thinking on the 
problem, or rather group of problems. 

To this commendable end of sober, persevering study of the 
labor situation this book is a contribution. It has organized 
the necessary data under logical headings. While it does not 
pretend to have exhausted the subject, something a single volume 
could not do, it presents from the most authoritative source, 
various aspects of labor questions and experiments in labor 
relations which at the present time are of the greatest interest 
to the largest number of persons. 



PROBLEMS OF LABOR 3 

It is my conviction that a collection such as this is, repre- 
senting all points of view is of more value than a book by one 
author or representing one point of view can possibly be, and 
that a careful reading of this book will make good return in 
a broader grip on the subject, and possibly in pointing the way 
along which intelligent experimentation holds out a promising 
measure of results. 

January 22, 1920. Meyer Bloomfield. 



GENERAL 



THE CENTRAL PROBLEMS 1 

The first problem of reconstruction is the Business Man. 
As Brooks Adams said four years ago, in his impressively con- 
servative book on "The Theory of Social Revolutions," the 
modern business man — "capitalist," Mr. Adams calls him— has 
been evolved under "the stress of an environment which de- 
manded excessive specialization in the direction of a genius 
adapted to money-making under highly complex industrial con- 
ditions," to which "money-making attribute all else has been 
sacrificed," so that he "thinks in terms of money more ex- 
clusively than the French aristocrat or lawyer ever thought in 
terms of caste." With this socially blind and for the present 
politically powerful class, our country must reckon thoughtfully 
and justly. To the extent that reconstruction solutions make 
it necessary to subordinate accustomed proprietary interests to 
justice and fair dealing, uncompromising opposition must be ex- 
pected from all business interests that are rooted in or affiliated 
with monopoly. 

The second problem of reconstruction is Labor. We have 
become so habituated to thinking of labor exclusively in terms 
of "hiring'* and "firing" and "wages" and "labor turnover," and 
"lower classes," that we neglect vital distinctions. We must 
learn to realize that labor is the antithesis of idleness, not of 
capital or business, not of industrial investment, leadership or 
management. It ranges all the way from the most impoverished 
worker to the most prosperous manager of work, in so far as 
their work is socially useful. When, therefore, we think of 
Labor as wage-working classes in contradistinction to employ- 
ing classes, we find ourselves in a dizzy whirlpool of thought — 
the so-called "conflict of labor and capital." But since we must 
take the public mind as we find it, we shall have to face the 
labor problem as a conflict between employing classes and wage- 

1 By Louis F. Post. Everybody's. 40:60. February, 1919. 



6 SELECTED ARTICLES 

working classes. Yet we may think of the former as composed 
of useful workers as well as privileged idlers, and of the latter 
as a class of which some are as parasitical as the idle rich, 
though less expensive to society. We must not forget, either, 
that all of us depend upon the wage-working class for a living. 
This is an impressive fact which the "labor shortage" in war 
time has emphasized. We must realize, too, that all wage- 
workers depend for work upon working opportunities which 
employing classes control — many of which they control arbi- 
trarily, unjustly and destructively. 

Those two problems are factors in every other problem of 
reconstruction. If legitimate and useful business interests con- 
tinue their alliance with privileged and harmful business in- 
terests, or if wage-working interests continue to be dealt with 
as if the relationship of Business to Labor were one of master 
class to working class, then the other reconstruction problems 
will, of necessity, be inefficiently and dangerously dealt with. 
But if reasonable solutions of the business-man problem and the 
labor-class problem are accepted, other reconstruction problems 
will almost solve themselves. 

The more conspicuous among the subsidiary problems may 
be summarized about as follows : 

(i) Collective bargaining between organized business and 
organized labor. This would lead to reasoned-out and coopera- 
tive adjustments of labor disputes. 

(2) An open thoroughfare to natural resources for all work- 
ers. Their socialization in permanent and convenient locations 
under assurances of profitable and congenial work, such as gov- 
ernment could wisely give, would solve a multitude of recon- 
struction problems; for it would automatically maintain the 
general supply of employable workers at a level likely to prevent 
unreasonable exactions by Labor and oppressive exploitations 
by Business. 

(3) Perpetuation of public ownership of the postal, rail- 
road and telegraphic service, and extension of the principle to 
all other utilities which emanate from the public in order to be 
operated for the public. This would subordinate to common uses 
those national agencies of common service which have been too 
long at the mercy of money-making specialists. . 

(4) Socialization of the social value of all privately owned 
natural resources. This would put an end to capitalistic 



PROBLEMS OF LABOR 7 

monopolies of water-power, of oil and other mineral deposits, 
of natural forest growths, of unused agricultural and grazing 
areas, and of city sites. For those resources we are indebted 
to nature, not to financial legerdemain; and for their values we 
are indebted to social progress, not to antique ancestors. It 
would also abolish, or at least greatly lighten, the burdens of 
taxation on useful business operations. 

Other reconstruction problems confront us. Some may be 
different in form of statement, but in substance most of them 
differ hardly at all from those enumerated above. Whatever 
they may be, however, there are few, if any, but will glide into 
their places without much friction and be solved with a mini- 
mum of confusion if the enumerated problems are dealt with 
in social good faith and with administrative intelligence. 



FUNDAMENTALS OF THE INDUSTRIAL 
PROBLEM 1 

Increased production, increased saving, increased confidence 
— these are the three keys to the whole industrial problem. 

Production may be hampered either in pursuance of a de- 
liberate policy, or simply by the use of inefficient methods. The 
interest of Employers, as a general rule, is to increase output, 
the danger of over-stocking being met by improved distributive 
organisation and the opening up of new markets. Cases of re- 
striction for the sake of keeping up prices occur mainly in con- 
nection with monopoly products, and the problem of counter- 
acting the influences which make for restricted output in these 
cases deserves a more careful study than has yet been given to 
it. There is also a tendency, perhaps unconscious, on the part 
of some employers to throw obstacles in the way of increased 
output due to the exceptional efficiency of employees. They 
would rather have a smaller output produced by men receiving 
wages not above the customary limit than an increased output 
produced by men earning exceptionally high wages. This policy 
is not only unjust to the men concerned; it is shortsighted and 
uneconomic from the point of view of the employer's own in- 
terests. On the other hand, the interest of the individual em- 

1 From Garton Foundation Memorandum on the Industrial Situation 
after the war. Rev. ed. January, 19 19. pp. 129-55. 



8 SELECTED ARTICLES 

ployer in maintaining a high standard of quality cannot be taken 
for granted, so long as large profits can be derived from the 
sale of inferior goods. Stronger action on the part of trade 
associations, and more general education of the purchasing pub- 
lic in standards of value, are needed both in the national interest 
and in that of producers of high class goods. 

Much of the limitation of output on the part of employers 
arises from inefficiency in management — conservation in methods, 
the retention of badly planned works and out-of-date plant, bad 
organisation, neglect of scientific research, the presence of 
"deadheads" on the office staff. There is some reason to hope 
that the experiences of the war and the keenness of competition 
after it may lead to greater attention being paid to these points. 

The limitation of output by labour arises partly from the 
legitimate desire to restrict the hours of work in the interest 
of health, education, family life and enjoyment. These are con- 
siderations of social welfare which cannot be set aside, We 
must look for greater production rather from increased effi- 
ciency than from an increase in the number of hours worked. 
There are, however, large sections of labour by whom a further 
limitation of output is deliberately practised in the assumed in- 
terests of their class as a whole. In some cases the motive is 
the honest but mistaken belief that the less work each man does 
the more there will be to go round. "Work" is regarded as an 
exhaustible fund, or at the best as a diminishable flow, and it is 
assumed to be in the interests of his class that each man should 
"use up" as little as possible. The fallacy lies in the concep- 
tion of an inelastic "wages fund." Wages come out of the 
stream of products, and other factors remaining constant, the 
distribution of wages cannot be widened except by an increase 
of the stream. In the case of trades in which employment is 
irregular and demand uncertain, the temptation to slacken work 
as a job nears completion is easy to understand, but the results 
of the policy are too wasteful to be contemplated with satisfac- 
tion. The remedy must be sought in a better organisation of 
the industries concerned which will give the workman greater 
security of tenure, and remove his fear of unemployment or 
relegation to lower-paid work as a result of exercising his 
maximum effort. A further cause of limitation of output lies 
in the natural differences of individual capacity. The workers 
believe that if each man' were allowed to produce to his full 



PROBLEMS OF LABOR 9 

power, the minimum standard demand by -the employer would 
be based on the performances of the quickest and most skilful 
and a "speeding-up" process would be introduced, involving 
either excessive strain or lessened earnings on the part of the 
majority. From this point of view, restriction of output is a 
sacrifice made by the ablest workers in the interests of their 
fellows. While such restrictions necessarily result in limiting 
the total output, it is obvious that labour cannot fairly be asked 
to remove them unless some definite assurance can be given 
against the evils anticipated. 

With regard to quality of output it is obvious that the 
workers' interest lies in the direction of a high standard which 
will improve the status of those concerned in the industry. 
Whether from the point of view of earning power or of in- 
terest and satisfaction in their work, the workmen have every- 
thing to gain by the standard of workmanship in their particular 
trade being raised. A general appreciation of this fact, re- 
sulting in greater attention by labour organisations to questions 
of craft training and quality of output would do much both 
to raise the position of labor itself and to strengthen the hands 
of those employers who are striving for a high level of produc- 
tion, as against those who seek to make their profit out of the 
bad taste of bargain hunters. 

It is clear that any restrictions placed upon production, 
whether by employers or employed, beyond those based upon 
the social needs of the workers, must be removed if the difficul- 
ties of the economic situation are to be faced successfully. In 
order to make good the wastage of war and raise the general 
level of industrial prosperity, the efforts of both parties must 
be united for the purpose of increasing the quantity of output 
and improving its quality. In order to avoid disastrous con- 
flicts with regard to the distribution of earnings, the national 
income, the total sum available for distribution, must be not 
only maintained but increased. The prospects of success de- 
pend upon the willingness of both sides to face the facts of the 
situation and to throw aside somewhat of their mutual distrust. 
Tt will be necessary for labour to abandon the policy of restrict- 
ing output and to concentrate upon demanding adequate remun- 
eration for the work performed. It will be equally necessary 
for employers to recognize that efficient production is the only 
ultimate source of profit, that the policy of keeping down wages 



io SELECTED ARTICLES 

and cutting piece rates is opposed to their own interests, and 
that industry as a whole will benefit by any rise in the level of 
craftsmanship and production. There is to-day an urgent 
necessity for the removal of all obstacles to any man either 
working or earning to the full extent of his capacity. 

The argument has brought us to the fundamental question 
which underlies all our industrial troubles — the relation between 
employers and employed. The limitation of production, whether 
by labour restrictions on output or cutting of piece rates by em- 
ployers, springs from the belief that the interests of employers 
and employed are inevitably and fundamentally hostile. If it 
can be shown that their interests are concurrent as regards pro- 
duction and only partially opposed even as regards distribution, 
the way will have been paved for a compromise which will 
leave both parties free to co-operate in the work of industrial 
reconstruction. 

The relations of employers and employed are partly antago- 
nistic as regards distribution, because it is to the interest of each 
to secure a relatively large share of the wealth produced. They 
are not wholly opposed, even in this respect, because it is to 
the interest of the employer that his workpeople's standard of 
life shall be sufficiently high to promote efficiency and afford 
a reasonable incentive to effort; it is to the interest of the work- 
man that the firm shall be sufficiently prosperous to provide 
steady employment. Good work cannot be expected from men 
who are ill-fed and insufficiently clothed, or who feel that they 
derive no advantage from increased production. Continued em- 
ployment cannot be expected from a firm which is not making 
a profit on its business. The qualification becomes still more 
important when it is extended from the relations existing in a 
particular firm to industry as a whole. It is to the interest of 
all employers engaged in the supply of common commodities 
that wages as a whole should be good, in order that the 
purchasing power of their customers may be high. It is to the 
interest of the workers, who are also consumers, that firms pro- 
ducing articles of general use should be sufficiently prosperous 
to keep plants up to date and produce well and cheaply. 

The interests of employers and employed are concurrent as 
regards production, because it is to the benefit of each that the 
total available for distribution shall be as large as possible. The 
interest of the working class in increase of output may be 



PROBLEMS OF LABOR n 

limited by other than economic considerations. They will not 
accept for the sake of increased wages methods of work which 
involve loss of self-respect or a narrowing of their life by undue 
restriction of leisure. To this extent the interest of the em- 
ployer may be over-ridden by considerations of social welfare. 
The real conflict is between his economic interests as an em- 
ployer of labour and the social interests of the community of 
which he is a member. But the employer and employed are 
both concerned in increased efficiency of production, which im- 
plies equal or improved output at less cost to the employer and 
with less strain to the employed. Here, too, it is to be noted 
that the workman, as consumer, will benefit by any increase in 
the general efficiency of production. 

The great obstacle to co-operation is the question of status. 
The ill-will of labour towards capital and management is not 
wholly a question of their respective share of earnings. Fric- 
tion arising over the distribution of earnings is in itself due 
quite as much to a sense of injustice in the machinery of distri- 
bution as to the desire for actual increase of wages. The fun- 
damental grievance of labour is that while all three are neces- 
sary parties to production, the actual conditions of industry 
have given to capital and management control not only over 
the mechanism of production, but also over labour itself. They 
feel that the concentration of capital in a comparatively few 
hands has rendered fair bargaining between the parties impos- 
sible. A man who leaves his work without reason inflicts on 
his employer a certain amount of loss and inconvenience. A 
man who is dismissed without reason may lose his livelihood. 
While each great firm represents in itself a powerful organisa- 
tion, apart from any employers' association to which it may 
belong, the men employed by the firm are solitary units, having 
no power of collective action without calling in the trade unions 
representing the whole of each craft. In the last resort the 
only effective weapon of the trade union is the strike, and the 
loss inflicted by a strike or lock-out on the capitalist class is 
not comparable with the acute personal suffering of the work- 
men and their families. They feel therefore that in any dis- 
pute the dice are weighted against them. 

There is also a very widespread feeling that labour as a 
whole is faced by great disadvantages in ventilating its griev- 
ances. The tribunals are composed, the press is owned and 



12 SELECTED ARTICLES 

run, by men of another class; and the complaint is frequently 
made that the labour representative and the labour case do not 
receive the fair play and courtesy which would be extended to 
those of their "opponents." 

The attitude of a certain section of employers who look on 
their employees as "hands," as cogwheels in the industrial ma- 
chine, having a market value but no recognised rights as hu- 
man beings, is bitterly resented. Still more offensive is the 
attitude which regards the working man as a very good fellow 
so long as he is kept in his place, and requiring to be guided 
and disciplined, but not to be consulted in matters vitally affect- 
ing his interests. Labour has come to know its power. It 
realises that it is an indispensable party to the production of 
wealth and it requires to be treated frankly as a partner with 
equal rights and equal responsibilities. 

The grievances of the employers are no less valid. They 
complain of deliberate limitation of output, slackness and ineffi- 
ciency in work, short time and malingering, the lack of any 
feeling of responsibility. They point out that many leaders of 
labour opinion carefully discourage any sense of loyalty to the 
firm — the source from which the earnings of capital and labour 
are alike derived — that even a fair employer can feel no con- 
fidence that his workmen will back him up in a pinch. Any 
effort to improve the condition of the employees is regarded as 
a concession extorted from weakness and is followed by further 
demands which bear no relation to the condition of trade. 
Even 7 period of prosperity produces a demand for higher 
wages ; but no amount of depression is considered as an excuse 
for reverting to a lower scale. The trades union wage regu- 
lations place obstacles in the way of differentiation between the 
efficient and industrious workman and those who are less skilled 
or less hardworking. At the same time they render it impos- 
sible to continue in employment, without actual loss, men whose 
capacity for production has been decreased by age or accident. 

The gravest complaint, however, relates to the insecurity of 
bargaining. The employer's power to negotiate directly with 
his employees is restricted by the union, yet bargains thus made 
with the men's accredited representatives are continually broken 
by those whom they profess to bind and the union itself cannot 
enforce the agreement which it has made. 

So long as the fundamental interests of employers and em- 



PROBLEMS OF LABOR 13 

ployed are believed by the majority to be purely antagonistic, no 
cure for the grievances of either side is likely to be found, since 
the wrongs of which both sides complain spring from that very 
feeling of hostility and suspicion. 

The limitation of production carries with it a limitation of 
the possible amount of savings. If the total amount produced 
is low, the balance of production over consumption will be low 
also. But class-hostility hampers saving in other ways. The 
supposed clash of interests destroys the sense of responsibility 
in the use of wealth. Discontent with economic conditions is 
productive of reckless expenditure. The man who feels his 
conditions of life to be unworthy has no incentive to save, be- 
cause he has no hope of substantial improvement in his condi- 
tion. The worse that condition is, the greater is his need of 
amusement and palliatives to render it bearable. Sound invest- 
ment is discouraged because the prospect of repeated outbreaks 
of industrial warfare makes confidence impossible. 

We see, therefore, that the mutual hostility of employers and 
employed is the prime obstacle to the three essentials of indus- 
trial prosperity — increased output, increased saving, increased 
confidence. It is only from the removal of this obstacle that 
any one of the three great parties to the industrial process can 
look for a permanent increase of earnings. 

We may therefore lay down these four broad principles as 
those which must guide our attempt to solve the industrial prob- 
lem. 

(a) The first necessity of the industrial situation is greater 
efficiency of production. In order to meet the difficul- 
ties created by the war, to make good the losses of cap- 
ital, and to raise the standard of living amongst the 
mass of our people, we must endeavour to increase 
both the volume and the quality of output. 

(b) In order that this result may be obtained without detri- 
ment to the social welfare of the community, it must 
be sought for rather in improved organisation and the 
elimination of waste and friction than in adding to 
the strain on the workers, and must be accompanied 
by a change of attitude and spirit which will give to 
industry a worthier and more clearly recognised place 
in our national life. 



14 SELECTED ARTICLES 

(c) This can only be accomplished if the sectional treatment 
of industrial questions is replaced by the active co-oper- 
ation of labour, management, and capital to raise the 
general level of productive capacity, to maintain a high 
standard of workmanship, and to improve working 
conditions. 

(d) It is essential to the securing of such co-operation that 

labour, as a party to Industry, should have a voice in 
matters directly concerning its special interests, such 
as rates of pay and conditions of employment. It is 
necessary to create adequate machinery both for secur- 
ing united action in the pursuit of common ends and 
for the equitable adjustment of points which involve 
competing interests. This machinery must be suffi- 
ciently powerful to enable both sides to accept its de- 
cisions with confidence that any agreement arrived at 
will be generally observed. 
There are many to whom these principles will not. seem to 
go far enough. They are convinced that the only solution lies 
in a complete reconstruction of society — the abolition of private 
ownership of land and capital, the establishment of state or 
guild socialism, the re-integration of industry, the return to the 
land, the break-up of the existing trade unions. Accordingly 
they reject the notion of co-operation between employers and 
employed as involving an abandonment of the first essentials of 
reform. If we were discussing the abstract ideal of Society, it 
would be necessary to meet their criticisms by discussing each 
of their proposals on its merits. But the present issue is a 
narrower one. We have to deal with a definite and immediate 
danger — the prospect of an industrial crisis involving loss and 
hardship to all parties to Industry. It is obvious that no mea- 
sure involving a radical reconstruction of the social system has 
any chance of adoption in time to avert this evil. On the other 
hand, the prospect of any specific programme emerging from a 
period of internal conflict is small. The results of social or 
political upheavals have seldom been those anticipated by their 
promoters. The men whose ideas gave birth to the French 
Revolution did not foresee the Terror or the Empire. The Long 
Parliament foresaw neither the reign of the Major-Generals 
nor the Restoration, If we are to find a way out of the 



PROBLEMS OF LABOR 15 

threatened difficulties, we must do so by making the best use of 
the materials at hand, accepting the conditions under which we 
work and seeking to unite all classes in the pursuit of interests 
which are common to all. Whatever may be the ultimate direc- 
tion of industrial progress, an advance is more likely to be 
founded on a first right step than to come through the chaos of 
industrial warfare and class-hatred. 

The difficulties of devising any scheme of co-operation 
which shall be acceptable alike to employers and employed are 
great enough. It demands from both a clear understanding of 
their respective parts in the process of production, a measure 
of sympathy with the point of view of the other parties to that 
process and a just perception of the respective weight to be 
attached to conflicting and to common interests. It calls for a 
certain daring in experiment and for a willingness to make 
sacrifices, if needs be, for the common good. It requires both 
parties to abandon recrimination as to the mistakes of the past 
and to approach each other in a new spirit. 

These are great demands ; but the emergency and the oppor- 
tunity are also great. Whatever we may do, we may be sure 
that things will not continue to move quietly in the familiar 
grooves. The whole world alike of conditions and ideas has 
been violently shaken and a ferment has been set up out of 
which may come either good or evil, but in no event a re- 
version to the old order. We cannot alter the facts by ignoring 
them. Our only choice lies between the risks involved in 
abandoning ourselves passively to - the forces of change and 
the effort required to harness them for our own ends. 

To avoid chaos is much; of itself it would be worth no small 
sacrifice and effort on the part of all. The gain which might 
accrue to any class from conflict is shadowy and uncertain; the 
loss and suffering to every class alike are certain and heavy. 

But to avoid danger is not all. It seems probable that we 
stand to-day at one of those definite turning points in human 
history where a generation of men has it in its power, by the 
exercise of faith and wisdom, by facing the problems of the 
moment without passion and without shrinking, to determine 
the course of the future for many years. If we can rise to the 
height of our opportunity we may hope not merely to pass 
safely through the immediate crisis, but to raise the whole tone 
and level of national and individual life. 



16 SELECTED ARTICLES 

Whatever action is taken must be the result of frank and 
full discussion between representatives of all parties to the ques- 
tion. Any attempt to enforce upon one party a scheme framed 
wholly by another would defeat its own object and precipitate 
the crisis. It will not do to look to the Government for the 
initiative. Whatever part the State may play in the future of in- 
dustry, it cannot move in advance of the general level of opin- 
ion among those concerned. Most of the difficulties which have 
been analysed in this memorandum apply with equal force to 
state controlled industries, and w 7 hile the solution may involve 
legislative sanction or state action, the problem itself can be 
settled only by agreement between those chiefly concerned. 

The first step towards agreement is to define the functions 
of the three parties to production. 

Capital is necessary to a business for the erection of plant, 
the purchase of raw material, and working expenses. In order 
that capital should be used to the best advantage for the pur- 
poses of industry, it is necessary that investors should display 
sound judgment as to the prospects and requirements of par- 
ticular enterprises, exercising caution or daring as occasion 
demands. 

Management is concerned with the disposition of the capital 
provided, the erection and employment of machinery and plant, 
the general organisation of the business, the placing and accept- 
ance of contracts, the purchase of the raw material, and the 
sale of the finished product. The performance of these func- 
tions requires not merely acknowledge of the particular busi- 
ness concerned but of all which are in any way connected with 
it, a careful study of markets, of methods of distribution, and 
of financial conditions. 

Labour undertakes the conversion of the raw material into 
the finished product, by aid of the plant and machinery pro- 
vided. While the first requisite in the workman is a thorough 
understanding of his own job, the maximum efficiency can only 
be attained if he has a clear conception of the part played by 
his own work in the whole process of production. 

These definitions are framed with a view to a manufacturing 
business, but they can be adapted, by changes which will readily 
suggest themselves and are not vital, to a distributive industry. 

It is obvious that the functions of capital, management, and 
labour overlap. In many cases the man who provides the funds 



PROBLEMS OF LABOR 17 

of a business also directs its working. In such cases he per- 
forms both the waiting and risk-taking functions of capital 
and management's function of expert control. It is logical to 
regard his profits as consisting partly of interest on the capital 
provided and partly of remuneration for his services as man- 
ager. Again, a foreman or a ganger combines to some extent 
the functions of labour and management; and in general, the 
spheres of management and labour activity are too closely con- 
nected for any clear line of demarcation to be drawn between 
them. Capital itself represents the result of past services per- 
formed by all three parties. 

This inter-relation of functions constitutes a real partnership 1 
between the persons concerned in any business, whether as in- 
vestors, managers, or workmen, or in any two or all of these 
capacities. At present the relation between them is unrecognised 
or only partly understood, and the result is to produce hostility 
instead of co-operation between the partners. The attention of 
all is apt to be concentrated on the points in which their interests 
conflict to the exclusion of those in which they are common. 

This failure to realise the possibilities of co-operation springs 
largely from neglect of a fundamental principle. The first 
article of partnership is equality of knowledge. At present the 
w r orkers have little knowledge of the capital risks, working ex- 
penses, establishment and depreciation charges of a business, or 
of the relation between their particular job and the general pro- 
cess of production. On the other hand, employers have, as a 
rule, a very imperfect understanding of the workers' point of 
view, the degree in which they are affected by economic and 
social considerations respectively, and the effect of particular 
processes and methods of working upon their physical and moral 
life. From this mutual ignorance arise innumerable misunder- 
standings with regard to rates of pay and conditions of labour 
which are capable only of arbitrary solutions, because neither 
side understands the standpoint of the other. It is probable 
that a large percentage of the disputes arising over rates of pay, 
the introduction of labour-saving machinery, hours of work, the 
demarcation of tasks, trade union restrictions, could be avoided 
or compromised, if employers and employed really understood 

1 The word partnership is here used in its widest sense and does not 
involve the acceptance of what are generally known as co-partnership 
schemes. 



18 SELECTED ARTICLES 

the reasons for the attitude of the other party. In default of 
such understanding the dispute takes on the character of a trial 
of strength, in which each side is compelled, for the sake of 
principle and prestige, to put forth efforts disproportionate 
to the actual point at issue. 

We have said that the chief obstacle to co-operation is the 
question of status. The development of modern industry has 
turned the operative into a mere cog in the industrial machine. 
The average working man has no say in the management of 
the business and very little as to the conditions of his employ- 
ment; he has no interest in the success of the firm, except that 
it should not collapse altogether; and the tendency has been 
more and more to reduce his work to a mechanical routine. 
The term "wage-slavery," as we have seen, embodies the re- 
volt of the worker not only against an unequal bargain but 
against a system which gives him neither interest, nor pride, 
nor a sense of responsibility in his work. To a large proportion 
of those engaged in industry their work has become something 
external to their personal life, a disagreeable necessity, afford- 
ing no opportunity for self-expression, the joy of creation, or 
the realisation of healthy ambitions. The result has been a 
serious impoverishment and enfeeblement of life and character 
and a permanent obstacle to industrial development. It is im- 
possible for men in this position to take long views, or to con- 
sider innovations from the standpoint of industry as a whole. 
The opposition to new methods of working, labour-saving ma- 
chinery, dilution of labour, scientific management, is only in part 
the result of specific and reasoned objections. It springs still 
more largely from the fact that these schemes are imposed from 
above and are presumed to be framed solely in the interest of 
the employers. The opposition to them is, in fact, a revolt 
against dictation. On the other hand, the uncompromising at- 
titude of employers does not, generally speaking, arise from a 
tyrannical spirit or a mere desire for increased profits, but 
from impatience with the men's separatist attitude and their 
inability to realise the common dependence of employers and 
employed upon the produce of their joint exertions. 

The same difficulty arises in the case of distribution of 
earnings. The worker feels that his labour is treated as a mere 
commodity, the market value of which may be forced down by 
the employer, irrespective of any consideration of a decent 



PROBLEMS OF LABOR 19 

standard of life for the employed, and that he receives the re- 
ward of his toil, not as a matter of right or as the equitable 
division of the proceeds of joint effort, but as a dole fixed by 
the arbitrary will of the employer or as a concession extorted 
by force. The employer feels that each demand made upon him 
represents a raid upon his profits limited solely by the power of 
the workers' organisations and unaffected by any consideration 
of the working expenses of the business, provision for depre- 
ciation or dilapidations, or the building up of a« reserve against 
future depression. In the confusion of thought arising from 
imperfect understanding, there is a tendency to regard the 
whole problem as centreing round the concrete question of dis- 
tribution, which becomes a symbol of the general opposition of 
interests. The consequence is that disputes as to wages are 
often fought on either side with a bitterness and obstinacy 
altogether out of proportion to the amounts involved. In order 
to arrive at a clearer conception, it is essential to disentangle 
as far as possible the economic and non-economic factors. If 
the question of status can be settled, the main obstacle to an 
agreement as to distribution will have been removed. 

The problem is, therefore, to settle this question of status 
in some way which shall give the workman the sense of self- 
respect and responsibility which he desires, without interfering 
unduly with the employer's exercise of the necessary functions 
of management. The trade union regulations, which have been 
so largely suspended by agreement for the period of the war, 
were mostly directed towards this end — the assumption by la- 
bour of some measure of control over the conditions under 
which it works. They refer to wages, hours of labour, over- 
time and Sunday work, apprenticeship and the method of entry 
into particular occupations, the kind of work to be performed 
by different classes of workers, the methods of negotiation be- 
tween employers and employed, and similar questions. In other 
words, they represent an attempt to substitute for the autocratic 
control of the employer over the working lives of his employees 
a greater and greater degree of self-direction by the organised 
workers themselves, acting through their accredited representa- 
tives. 

As a natural result of the assumed conflict between the 
fundamental interests of employers and employed, the action of 
the trade unions took the form, in appearance at least, of an 



20 SELECTED ARTICLES 

attack upon the profits of the employers and their right to con- 
trol the conduct of their business. It was largely as a defence 
against the unions that the great employers' associations came 
into being. After making all allowance for the occasional in- 
subordination of trade union members and the lack of support 
given in some quarters to the employers' federations, the effect 
of these parallel organisations has been beneficial to both sides. 
Hitherto, however, the action of both groups has been almost 
entirely negative. They have placed restraints both upon 
tyranny and upon anarchy; they have succeeded in compromis- 
ing many disputes and in restricting the occasions of open con- 
flict; but they have done little or nothing to remove the con- 
tinual undercurrent of latent hostility and divergence of effort 
which has hampered industrial development far more than the 
direct effect of strikes and lock-outs. They have protected the 
special interests which they respectively represent; but they 
have not risen to the conception of combined action in pursuit 
of their common interests. Valuable as their work has been, 
it can hardly be regarded as an adequate return for the ability, 
energy, and power of organisation displayed on both sides. 

The explanation of the comparative failure of the em- 
ployers' associations and trade unions on the constructive 
side of the industrial problem is to be found in their strictly 
sectional and defensive origin and outlook. Regarding 
themselves as entrusted with the interests of one party to 
industry and not of industry itself, they have paid no atten- 
tion to the problems and difficulties of the other side, and 
they have come together only when one had a demand to 
make of the other or when a conflict was imminent. Thus 
they have always met in an atmosphere of antagonism, and 
their negotiations have been carried on as between two hos- 
tile bodies. Exchange of views has come at too late a stage 
in the proceedings, when a stand has already been taken on 
both sides and prestige or prejudice forms an obstacle to 
concessions. What is still more important, their discussions 
have been confined to specific points of dispute and have 
not embraced the consideration of constructive measures for 
the improvement of industrial conditions and the increase 
of efficiency. Yet the possibilities of combined action which 
lie in these two great groups of highly organised and power- 



PROBLEMS OF LABOR 21 

ful bodies might transform the whole face of industrial life. 
Their united knowledge of both sides of the industrial pro- 
cess should enable them to throw light on every phase of its 
successive developments. Their united strength would 
render them, in combination, practically irrestible. But to 
secure the realisation of these possibilities the co-operation 
between the two groups must be continous and constructive, 
and must be based upon a recognition of the common in- 
terests of employers and employed, both as parties to in- 
dustry and members of the community. Employers must 
realise that both their own interests and the obligations of 
citizenship impose upon them the necessity of a sympathetic 
understanding of the lives and standpoint of those with 
whom they work and a willingness to co-operate, without 
dictation or patronage, in every endeavour to improve their 
material or social conditions. Labour must realise its direct 
interest in the improvement of industrial processes, the 
organisation of industry, the standard and quantity of pro- 
duction, and the elimination of waste in material or effort. 
Both the employers' associations and trade unions must 
learn to regard themselves as joint trustees of one of the 
most important elements of the national life. 

The machinery necessary for such co-operation will re- 
quire to be created. The existing conciliation boards, or 
industrial boards on the Australian model, while they per- 
form many useful functions, will not serve this purpose. 
These Boards are, in fact, independent courts sitting to 
adjudicate upon claims in respect of which the parties are 
unable to agree. Such a method of adjudication is in many 
ways preferable to the alternative of leaving questions to be 
settled by conflict, as the result of a strike or lock-out. 
They enable employers and employed to contract on moral 
equal terms. They result also in the production of detailed 
evidence whereby each side might, if it had the inclination, 
understand the case of the other. But here, too, the ex- 
change of views comes too late and the parties meet not to 
co-operate but to oppose each other. Moreover, they are 
concerned solely with the settlement of specific disputes, and 
while they may continue to do useful work in this connec- 
tion, they cannot provide the opportunity for that continu- 



22 SELECTED ARTICLES 

ous and constructive co-operation of management and la- 
bour which is essential to any satisfactory solution of the 
industrial problem. 

Something much more comprehensive is required, and 
the task of providing it will need very careful attention from 
those concerned. It is unlikely that any one scheme could 
be devised which would be applicable to all industries or in 
all localities. The utmost elasticity, whether in present ap- 
plication or in future development, is necessary to any sys- 
tem of industrial organisation, for industry itself develops 
and modifies day by day. But the general lines upon which 
development is possible can be deduced from the foregoing 
analysis of the difficulties to be overcome. 

In its simplest form, the new machinery would consist 
of joint committees, representing both the management and 
the works staff. This method would lend itself readily to 
experiment by individual firms and could be applied even in 
the unorganised trades where no strong trade unions or 
federations of employers exist. At the meetings of such 
committees any questions affecting working methods and 
conditions could be brought up for discussion by either side. 
The representatives of management would be required to 
explain the nature and extent of any proposed innovation 
designed to increase output or economise effort — the intro- 
duction of new automatic machinery, time and motion study, 
standardisation of tools, analysis of fatigue, elimination of 
waste — and its effect upon the earnings of the firm and of 
the individual worker. This explanation should be as clear 
and full as possible, with the object of giving each worker 
an interest and sense of responsibility in his work, by mak- 
ing clear to him, through his representatives, the reason for 
the methods to be adopted and the relation of his job to 
the whole process of production. The proposals having 
been explained, the workers' representatives would consider 
them from the point of view of the interests of the men em- 
ployed, the relation between the different classes of labour, 
the strain on the workers, the amount of interest and intelli- 
gence put into their work. If necessary, they would put 
forward modifications or safeguards for the protection of 
these interests. Where the result was to show a real diver- 
gence of opinion or of interest, it would be freely discussed, 



PROBLEMS OF LABOR 23 

with a view to finding a way round and adjusting the bal- 
ance between common and competing interests. In like 
manner, proposals for alterations in the hours or conditions 
of labour, in the interests of health or social welfare of 
the workers, would be put forward by the workers' repre- 
sentatives and discussed in the light of any objections on 
the score of expense or difficulties of working urged by the 
representatives of management. While the representatives 
of management would naturally be concerned mainly with 
the efficiency of the business and those of labour with the 
immediate interests of the workers, it is very desirable that 
neither should confine their attention to their own side of 
the business. A wise employer will always have the in- 
terests of his staff at heart, and workmen who feel them- 
selves to have a recognised interest in the business will 
have many suggestions to put forward for promoting its 
efficiency. 

In the staple trades, the method of works committees 
would require to be replaced, or supplemented, by joint 
boards composed of representatives of the employers' asso- 
ciations and the trade unions. Having regard to the differ- 
entiation of functions between management and labour and 
the large number of problems affecting one or both parties, 
which arise in a big industry, two co-equal boards might be 
created in each industry, one representing management and 
the other labour, with a supreme board of control co-ordi- 
nating the work of both. The functions of the management 
board would cover the "business" side of the industry; those 
of the labour board would relate to conditions and hours of 
labour, the demarcation of tasks and everything that 
touches most nearly the life of the worker. Representatives 
of these boards, meeting on the supreme board of control, 
would deal jointly with all matters by which the interests 
of both parties were affected. Such questions as the dilu- 
tion of labour, which is becoming increasingly important, 
yet which cannot be dealt with satisfactorily so long as it 
is approached from one side only, would be discussed by 
the joint board of control, both from the point of view of 
efficiency in production and from that of the interests of 
the workers and the position of the trade unions. In this 
manner it should be possible to construct and give effect to 



24 SELECTED ARTICLES 

a definite policy and programme for each great industry as 
a whole, representing a reconciliation between the common 
and competing interests of employers and employed, and 
based both upon the desire to obtain the maximum of effi- 
ciency and the desire to obtain the best possible conditions 
for the workers. 

In order to avoid the evils of inelasticity and over-cen- 
tralisation, and to make due provision for the varying con- 
ditions of different localities and firms, it might be ad- 
visable to combine the creation of these central boards with 
an organisation of district and works committees, charged 
with the special care of local and individual interests and 
problems. The representation of such committees on the 
central boards, and the delegation to them of local ques- 
tions, would constitute a protection against the injustice 
which might otherwise be done by an attempt to equalise 
rates of pay in areas which differ widely as to the cost of 
housing and food, or in which the conditions of production 
and transport produce important variations in working ex- 
penses. They would also serve as a protection to estab- 
lished workshop and local craft traditions against the dead- 
ening tendency to a mechanical uniformity. 

In its most ambitious form, the Supreme Board of Con- 
trol would resolve itself into a national industrial council 
for each of the staple industries or groups of allied indus- 
tries. The members would be elected by ballot, each elec- 
toral unit, or pair of parallel units, returning one represen- 
tative of management and one of labour. In many indus- 
tries it would be desirable to find a place on the Council for 
representatives of the applied arts, both with a view to rais- 
ing the standard of design and workmanship, and with the 
object of encouraging the human and creative interest in 
production. A speaker of broad sympathies and experience, 
capable of directing and focussing the discussions upon the 
practical problems to be dealt with, would be chosen by 
mutual consent, but would have no casting vote, his ca- 
pacity being purely advisory. Such industrial councils 
would in no sense supersede the existing employers' asso- 
ciations and trade unions, many sides of whose present 
activities would be unaffected by the creation of the new 
bodies. Matters connected with the sources and supply of 



PROBLEMS OF LABOR 25 

raw material and the cultivation of markets for the disposal 
of the finished products would remain exclusively the con- 
cern of purely commercial federations of manufacturers, 
acting in conjunction with the state. The benefit side of 
trade unions and many phases of the internal organisation 
of labour by them would be similarly unaffected. In other 
matters the connection between the old and the new bodies 
would be close, without any loss of identity. The unions 
and the employers' associations would send their delegates 
to the industrial councils charged with the defence of the 
special interests represented by them and equipped with 
special knowledge of their particular problems. The gen- 
eral policy outlined by the industrial parliaments would be 
carried out in detail largely through the older organisations. 1 
The field of action open to the industrial councils would 
be very great. It would extend, for instance, to (a) the 
suggestion and consideration of improved methods and 
organisation; (b) the maintenance of works discipline and 
output; (c) the maintenance of a high standard of design 
and workmanship; (d) the education and training of appren- 
tices, and the conditions of entry into the industry con- 
cerned; (e) the demarcation of tasks; (/) the prevention of 
unemployment, the development of security of tenure in the 
trade and the decasualisation of labour; (g) questions of 
wages and piece rates; (h) prosecution of research and ex- 
periment, and (i) the improvement of the public status of 
the industry. Where the council represented a group of 
allied trades, it would naturally concern itself with the co- 
ordination of their work and the adjustment of their re- 
spective interests. In addition to the promotion of internal 
prosperity, the councils would be able to give public utter- 
ance to the views and needs of each industry in its relation 
to the whole national life. They would take account not 
only of economic but of moral and aesthetic values. Their 
object would be not merely to increase the productive effi- 
ciency of the industry and to reconcile the competing in- 
terests of those engaged in it, but to emphasise the worth 
and dignity of industrial life and to enlarge the scope offered 

1 It should be clearly understood that the right to strike in default of 
agreement would remain unaffected. This point was made quite clear in 
the Whitley Reports. 



26 SELECTED ARTICLES 

by it to the energies and ambitions of those concerned. It 
would be part of their task to emphasise the close connec- 
tion between industrial questions and those relating to edu- 
cation and social conditions. It might even be advisable to 
empower the industrial councils to apply for board of trade 
orders giving legal sanction to their decisions — but this 
would necessitate careful watching, and the provision of 
adequate safeguards, especially in the interests of consum- 
ers. 

There is, of course, a tendency in all great associations 
of industrial units to develop the danger of tyranny, which 
seems almost inseparable from a close corporation. If, 
however, it is found that the requirements of the time call 
for the creation of such organisations, it would be well to 
face this danger without flinching. The advantages to be 
obtained are enormous, and with the help of the legislature 
and the courts the dangers can be met. 

Whatever scheme is adopted, the essential thing is that 
it shall give expression to a real desire for co-operation be- 
tween employers and employed. In the unorganised trades, 
works committees on the plan already suggested may be 
sufficient for present needs. The probability is that, with 
increasing prosperity and better understanding, the desire 
for organisation will grow, and the tendency will be to ex- 
tend the scope both of employers' and labour organisations 
and to increase their effectiveness, so as to give the employ- 
ers' associations greater power to control the action of in- 
dividual firms and to enable the trade unions to make 
agreements with a greater certainty of their being carried 
out. It is evidently desirable that the organisation of em- 
ployers and of labour should proceed pari passu, with full 
mutual recognition, so that individual or small groups on 
one side should not find themselves confronted by powerful 
organisations on the other. When once a policy of co-oper- 
ation has been introduced, its future development and exten- 
sion may safely be left to time and experience. An attempt 
to lay down any definite and rigid scheme at the start would 
probably defeat its own object. The whole success of the 
policy depends upon the elasticity with which it can be 
adapted to practical needs and opportunities as they reveal 
themselves. It is obvious that, even in unorganised trades, 



PROBLEMS OF LABOR 27 

it might be applied to many questions of works economy, 
with the result of stimulating care and efficiency on the part 
of the workers, and giving management a better understand- 
ing of their point of view, to the advantage of both. In the 
engagement of men and their allocation to different depart- 
ments and jobs, it should be possible to take advantage of 
the special knowledge of both sides, by consultation be- 
tween the managers and the representatives of the works 
staff as to the numbers and qualities of the men required. 
In some cases it might even be possible to appoint a per- 
manent joint committee to deal with the question of the 
supply of labour, and the requirements of the work in hand. 



LABOR'S BILL OF RIGHTS 1 

The "Bill of Rights," formulated and adopted on December 
13 by the national labor conference called by Samuel Gompers, 
president of the American Federation of Labor, and attended 
by representatives of 119 international unions, including the 
"Big Four ,, railroad brotherhoods, contains the following decla- 
rations of principles and purposes, upon which more than 
5,000,000 members of the trades union movement in the United 
States are to stand : 

We speak in the name of millions who work — those who 
make and use tools — those who furnish the human power neces- 
sary for commerce and industry; we speak as part of the nation 
and of those things of which we have special knowledge. Our 
welfare and interest are inseparably bound up with the well- 
being of the nation. We are an integral part of the American 
people, and we are organized to work out the welfare of all. 

The urgent problem that sorely troubles our nation and 
vitally affects us as workers makes necessary this special consul- 
ation. 

The great victories of human freedom must not have been 
won in vain. They must serve as the instruments and the in- 
spiration for a greater and nobler freedom for all mankind. 

Autocratic, political and corporate industrial and financial in- 
fluences in our country have sought and are seeking to infringe 
upon and limit the fundamental rights of the wage-earners 
guaranteed by the constitution of the United States. 



28 SELECTED ARTICLES 

Powerful forces are seeking more and more aggressively to 
deny to wage-earners their right to cease work. We denounce 
these efforts as vicious and destructive of the most precious 
liberties of our people. So long as it is necessary to exercise 
the right to cease work — strike — as a final means of enforcing 
justice from an autocratic control of industry, so long must the 
workers remain in the right to strike. 

The autocratic attitude and destructive action of the United 
States Steel Corporation and its subsidiary branches to oppress 
the workers by denying them the exercise of their freedom of 
action, freedom of association, freedom of expression, must 
give way to a better understanding and relation and to secure 
the wage-earners in the exercise of their rights and liberties as 
free workers and citizens. 

Rights of Wage-Earners 

We protest against the attitude and action of the majority 
of the representatives of the employers in the employers' group 
who participated in the President's industrial conference Oc- 
tober 6-24, 1919. 

The proposals which the representatives of labor submitted 
to that conference were conservative, constructive and helpful. 
They were calculated to establish a working basis for the pro- 
motion of better relations between employers and workers — the 
right to organize, the right to collective bargaining through 
representatives of the workers' own choosing. The represen- 
tatives of the public constituted as a group indorsed and voted 
for that principle. By a small majority the employers' group 
voted against it and thus the proposals were defeated and the 
conference failed. 

The protection of the rights and interests of wage-earners in 
national, state and municipal service requires for them the right 
of organization. Since the interests of these workers can be 
best promoted through legislation and administration, their right 
to organization and affiliation with the A. F. of L. must at all 
times be safeguarded. 

The paramount issues that concern all the people of the 
United States, and in particular the wage-earners, are the per- 
version and the abuse of the writ of injunction and the neces- 
sity for full and adequate protection of the voluntary associa- 
tions of wage-earners organized not for profit. 



PROBLEMS OF LABOR 29 

Injunction a Revolutionary Measure 

The injunction as now used is a revolutionary measure which 
substitutes government by judicial discretion or bias for govern- 
ment by law. It substitutes a trial by one man, a judge, in his 
discretion, for a trial by jury. This abuse of the injunctive 
process undermines and destroys the very foundation of our 
free institutions. It is subversive of the spirit of a free people 
working out their destiny in an orderly and rational manner. 

Because we have reverence for law, because we believe that 
every citizen must be a guardian of the heritage given us by 
our fathers who fought for and established freedom and democ- 
racy, by every lawful means we must resist the establishment of 
a practice that would destroy the very spirit of freedom and 
democracy. Our protest against the abuse of the writ of in- 
junction and its unwarranted application to labor in the exercise 
of labor's normal activities to realize laudable aspiration's is a 
duty we owe to ourselves and posterity. 

To penalize strikes or make them unlawful is to apply an 
unwarrantable and destructive method when a constructive one 
is available. To reduce the necessity for strikes, the cause 
should be found and removed. The government has a greater 
obligation in this matter than to use its coercive powers. 

To promote further the production of an adequate supply 
of the world's needs for use and higher standards of life, we 
urge that there be established co-operation between the scien- 
tists of industry and the representatives of organized workers. 

Credit is the life blood of modern business. At present under 
the control of private financiers it is administered not primarily 
to serve the needs of production, but the desire of financial 
agencies to levy a toll upon community activity as high as "the 
traffic will bear." 

Credit is inherently social. It should be accorded in propor- 
tion to confidence in production possibilities. Credit as now ad- 
ministered does not serve industry, but burdens it. It increases 
unearned incomes at the expense of earned incomes. It is the 
centre of malevolent forces that corrupt the spirit and purpose 
of industry. 

We urge the organization and use of credit to serve produc- 
tion needs and not to increase the income and holdings of fi- 
nanciers. Control over credit should be taken from financiers 



30 SELECTED ARTICLES 

and should be vested in a public agency able to administer this 
power as a public trust in the interests of all the people. 

Policy of Railroad Operation 

Since the government has not worked out a constructive rail- 
road policy we urge for and on behalf of the railway workers 
and of the general public that the railroads be retained under 
government administration for at least two years after January 
i, 1920, in order that a thorough test may be made of govern- 
mental operations under normal conditions. The common car- 
riers of this country are the arteries of travel, commerce and in- 
dustry. Transportation service and rates are intimately bound 
up with industrial production in all parts of the country. It is 
essential that a thorough test be given to all phases of railroad 
control and operated before a definite peace-time policy be 
finally concluded. 

Never has the world been confronted with a more serious 
situation. Millions are in want, facing starvation. The chil- 
dren of war-stricken Europe, half fed, underdeveloped, appeal 
for help. Only with infinite pain, unnecessary loss of life and 
slowness of result can Europe rebuild her industries, restore 
her agriculture and re-establish her commerce without the help 
of America. 

The treaty setting forth the terms of peace has not been 
ratified by the United States. Boundaries are not fixed. 
Peoples are uncertain as to their allegiance. Under such condi- 
tions exchange and credit have lost voltage and in turn have 
paralyzed industry. 

As members of an organized labor movement that has for 
years maintained fraternal relations with the working people 
of Europe, we feel that our nation cannot with honor and hu- 
manity maintain a policy of isolation and disinterestedness for 
the distress and suffering of the peoples of Europe. Even if 
the necessity of the peoples of Europe did not have a compel- 
ling appeal, the inter-related economic interests of the world 
would prevent our limiting our attention solely to this hemi- 
sphere. 

Ratification of Peace Treaty 

The peace treaty includes provisions in an international 
agreement to prevent war among nations, with all its cruelties 
and sacrifices of human life; with its burden of indebtedness 



PROBLEMS OF LABOR 31 

and taxation; for reduction in standing armies, the diminution 
of great navies, and the limitation of the production of arms 
and amunition. If the senate shall fail to ratify the treaty of 
Versailles, our nation may be isolated from other countries of 
the world, which at some time might be pitted against us. Such 
isolation and possibilities would make necessary the creation and 
maintenance of a large standing army and a greater and more 
effective navy, in order in some degree to protect the republic 
of the United States from aggression by those countries which 
were our allies in the great war and which were and are now 
our friends. 

In addition, the workers of America have a deep interest and 
concern in the labor draft convention of the treaty and in its 
p-rrpose to raise to a higher standard the conditions of life and 
labor among peoples of all countries. Its cardinal declarations 
and provisions are that labor should not be regarded as a com- 
modity, that the eight-hour day and 48-hour week are standard; 
that there shall be one day of rest, preferably Sunday, in each 
week; that child labor shall be abolished, and continuing edu- 
cation for young workers assured; that men and women shall 
receive equal pay for equal work; that industrial better- 
ments shall be enforced by proper inspection, in which women 
as well as men shall take part; that wages shall be sufficient to 
maintain a reasonable standard of living, as this is understood 
in each clime and country, and that employes as well as employ- 
ers have the right of association for all lawful purposes. 

The United States is protected by this draft convention in 
two ways. First, that the recommendations which international 
labor conferences under the treaty may recommend may be 
accepted or rejected by our government; second, that no recom- 
mendation that would set a lower standard for the people of 
the United States than already exists within our borders can 
at any time be presented for consideration and action by the 
United States. 

To give the united support of our republic and of the allied 
countries to effective machinery to release the standard of the 
workers' condition in backward countries; to help humanize in- 
dustry for the common world weal, is, we insist, a paramount 
duty which our republic must perform. We insist, for the 
reasons herein set forth, that it is the immediate duty of the 
senate to ratify the treaty of Versailles. 



32 SELECTED ARTICLES 

Economic and Political Field 

The American labor movement resents the attempt of re- 
actionaries and autocrats to classify the men and women of 
labor with those groups which have nothing in common with 
its constructive purposes and high ideals, and with the funda- 
mental principles of our country. Those who aim to strike a 
blow against the legitimate operations of the workers in their 
struggle for freedom and for a higher and a better life must 
be met and overcome. 

We call upon all those who contribute service to society in 
any form to unite in the furtherance of the principles and pur- 
poses and for the rectification of the grievances herein set 
forth. We call especial attention to the fact that there is a 
great community of interest between all who serve the world. 
All workers, whether of this city or country, mine or factory, 
farm or transportation, have a common path to tread and com- 
mon goal to gain. 

Legislation which proposes to make strikes unlawful, or to 
compel the wage-earners to submit their grievances or aspira- 
tion- lo courts or governmental agencies, is an invasion of the 
rights of the wage-earners, and when enforced makes for in- 
dustrial slavery 

Anti-Strike Legislation 

We specifically denounce the anti-strike provision of the 
Cummins bill and all similar proposed legislation as un-Amer- 
ican, as being vicious in character and establishing by legisla- 
tion involuntary servitude. 

The warning given by Jefferson that the danger to the people 
of this republic lies in the usurpation of our judiciary of uncon- 
stitutional authority has been fully demonstrated. A judiciary 
unresponsive to the needs of the time, arrogating Lo itself 
powers which neither the constitution nor the purposes of our 
laws have conferred upon them, demands that at least in our 
time Americans must insist upon safeguarding their liberties 
and the spirit of sacred institutions of our republic. 

We urge that the judges of our federal courts shall be elected 
by the people for terms not exceeding six years. 

We declare that the voluntary organization of the workers, 
organized not for profit, are agencies of justice in industry and 



PROBLEMS OF LABOR 33 

trade. Despite legislative declaration that trade unions do not 
come under the provisions of anti-trust legislation, courts have 
not understood and are not now able or willing to understand 
that the organizations of wage-earners are not conspiracies in 
restraint of trade. 

We submit that anti-trust legislation has not only been in- 
terpreted to serve the purpose of outlawing trade unions, rob- 
bing them of their treasuries and the savings of the members 
and depriving them of their legal and natural rights to the 
exercise of normal activities, but that it has also failed com- 
pletely to protect the people against the outrageous machina- 
tions of combinations and monopolies. 

The United Mine Workers of America did all in their power 
to avert an industrial controversy in the coal industry. The 
autocratic attitude of the mine owners was responsible for the 
losses and sufferings entailed. While the miners have returned 
to the mines and have only now been afforded the opportunity 
cf having their grievances and demands brought to the light of 
reason, it is our hope that a full measure of justice will be ac- 
corded them even at this late date. 

Standard of Living 

There is a widespread belief that wages should be fixed on 
a cost-of-living basis. This idea is pernicious and intolerable. 
It means putting progress in chains and liberty in fetters. It 
means fixing a standard of living and a standard of life and 
liberty which must remain fixed. America's workers cannot 
accept that proposition. 

They demand a progressively advancing standard of life. 
They have an abiding faith in a better future for all mankind. 
They discard and denounce a system of fixing wages solely on 
the basis of family budgets and bread bills. Workers are en- 
titled not only to a living, but modern society must provide 
more than what is understood by the term "a living." It must 
concede to all workers a fairer reward for their contribution 
to society, a contribution without which a progressing civiliza- 
tion is impossible. 

No factor contributes more to industrial unrest and insta- 
bility than excessive costs of necessaries of life. It is a demon- 
strated truth that the cost of living has advanced more rapidly 
than have wages. The claim that increasing wages make neces- 



34 SELECTED ARTICLES 

sary increased prices is false. It is intended to throw upon the 
workers the blame for a process by which all the people have 
been made to suffer. Labor has been compelled to struggle 
desperately to keep wages in some measure up to the cost of 
living. The demand for higher compensation to meet new price 
levels has made industrial readjustment necessary. Existing 
high and excessive prices are due to the present inflation of 
money and credits, to profiteering by those who manufacture, 
sell and market products and to burdens levied by middlemen 
and speculators. 

The deflation of currency, prevention of hoarding and unfair 
price fixing, establishment of co-operative movements operated 
under the Rochdale system, making accessible all income tax 
returns and dividend declarations as a direct and truthful means 
of revealing excessive costs and profits. 

Industrial Co-operation Necessary 

Labor understands fully that powerful interests today are 
determined to achieve reaction in industry if possible. They 
seek to disband or cripple the organizations of workers. They 
seek to reduce wages and thus lower the standard of living. 
They seek to keep from restriction their power to manipulate 
and fix prices. They seek to destroy the democratic impulse of 
the workers which is bred into their movement by the democ- 
racy of the American republic. 

Labor must be and is militant in the struggle to combat these 
sinister influences and tendencies. Labor will not permit a re- 
duction in the standard of living. It will not consent to re- 
action toward autocratic control. In this it is performing a 
public service. 

We hold that the organization of wage-earners into trade 
union and the establishment of collective bargaining are the 
first steps toward the proper development of our industrial ma- 
chinery for service. 



CAUSES OF FRICTION AND UNREST 

LABOR'S INDUSTRIAL DEMANDS 1 

Causes of Labor Unrest 

The present Labor unrest is due to many causes, and it is 
important to separate those which are permanent from those 
which are temporary. Among the latter we may note especially 
the high cost of living, the large amount of unemployment, and 
the anxiety to which this gives rise, a certain impatience due to 
the exhaustion and strain of a long war, uncertainty as to the 
method of fulfillment of the promises given to trade unions, the 
knowledge that many people have made enormous profits out 
of a world disaster, and the belief that a nation which can find 
£7,000,000 a day for war, over a period of years, can afford to 
maintain its workers on a scale that formerly seemed well-nigh 
impossible. Moreover, there is a strong feeling among the 
workers that the psychological moment for them to improve 
their lot has arrived, and that if they fail to take the fullest 
possible advantage of it, such an opportunity may never occur 
again. They think that industrial conditions, in a year or two, 
will have settled down, for good or evil, into a groove, and then 
it will be a slow and laborious process to change them. 

But underneath these temporary causes of unrest, there are 
others which are permanent, and only as we succeed in re- 
moving these can we hope for any enduring settlement. Briefly, 
the permanent causes are four. First, the workers, better edu- 
cated, more alert, more conscious both of their disabilities and 
of their strength than they have ever been before, are de- 
termined to secure a standard of living which, at the very least, 
will raise them above the poverty line. They refuse to believe 
that it is an essential condition of modern society that the great 
mass of them, year after year, should constantly be confronted 

1 From an article by B. Seebohm Rowntree, Christian Science Moni- 
tor, May 20, 19 19. Mr. Rowntree is a director of the famous chocolate 
manufacturing firm of Rowntree & Co. Ltd., York, Eng., and a writer on, 
economic topics. 



36 SELECTED ARTICLES 

by the problem of making two ends meet, which were never 
intended to meet. Meanwhile, they see much of the wealth of 
the community continually sidetracked, as it were, in favor of 
the comparative few, and they grow more and more determined 
to safeguard the interests of the many. 

Demand for Control 

Secondly, workers have begun to protest against the posi- 
tion occupied by labor in the world of industry. There is a 
resolute and definite claim on their part to take a share in con- 
trolling industrial conditions. The views of the Syndicalist and 
Guild Socialist are only held by a small minority, but the de- 
mand for a substantial measure of control is widespread. 

Thirdly, there is a demand that workers who are capable 
of working and willing to work should be freed from the 
menace of unemployment, which at present hangs like a dark 
cloud over the lives of millions. 

Lastly, the workers ask for shorter hours. There is a grow- 
ing conviction among them that life should mean something more 
than "bed and work." Moral and intellectual claims have not 
been preached in vain, and those who lead in the Labor ranks 
realize fully that a man who leaves home for work at 5 or 
5 130 in the morning, and does not return until 5 130 or 6 o'clock 
at night, has neither the vitality nor the leisure for self- 
development. 

These, then, are Labor's four principal demands. If they 
are met on fair terms, we shall have industrial peace. If they 
are refused, we shail have industrial war. Clearly, we must 
decide whether they are just and reasonable. If we believe 
that they are, then we must, without delay, consider how to 
give effect to them, not in a niggardly or parsimonious spirit, 
but as fully as the economic circumstances of industry will 
permit. 

"But let us beware of a serious danger. The demands which 
I have formulated must be dealt with, not only at once, but as 
a whole. To attempt to deal with them separately, or in a 
piecemeal, half-hearted fashion, is to court certain failure. 

Wages and Cost of Living 

Clearly, the advance in wages which we wish to secure must 
be an advance in real wages. An advance which involves a 
corresponding advance in the cost of living can serve no useful 



PROBLEMS OF LABOR 37 

purpose. But, as Dr. Bowley has clearly demonstrated in his 
pamphlet on "The Division of the Product of Industry," a sub- 
stantial increase in wages involves an increased production and 
an increased efficiency which can only be guaranteed by the 
whole-hearted efforts of employers and workers alike. Now, 
cordial cooperation between Capital and Labor is impossible, 
unless Labor is given a real share in controlling working condi- 
tions, and is adequately safeguarded against the consequences 
of unemployment arising from any purely temporary disloca- 
tion which may follow on the introduction of labor-saving ma- 
chinery or improved methods. 

Coming to concrete proposals for immediate action, I be- 
lieve that the following steps should be taken, if we desire to 
have peace in the world of industry. 

1. A trade board should be set up for every industry, and 
the duty should be imposed upon it by statute of fixing, at the 
earliest possible moment, minimum wages which will enable a 
man to marry and to maintain a family of normal size in a 
state of physical efficiency, with a certain margin for contingen- 
cies and recreation. 

For the woman worker, the minimum wage should be suffi- 
cient to maintain her in health and respectability with, similarly, 
a small margin for incidental expenses. I think that this method 
is preferable to that of fixing a national minimum wage by 
Parliament. 

2. As a first step toward giving the workers a quite defi- 
nite share in the control of industry, Whitley councils should 
be established in all industries. But I am confident that these 
will fail without the universal establishment of workshop com- 
mitees which exercise real authority. In addition, a commis- 
sion should be set up to consider whether the workers should 
be given still further control at once, and if so, by what methods. 

3. An inquiry should immediately be set on foot into the 
difficult question of how the workers may best share in the 
prosperity of the industries in which they are engaged. Profit- 
sharing, as ordinarily practiced, has not been generally success- 
ful in stimulating their best efforts. Some scheme must be de- 
vised whereby the workers will have before them all the facts 
regarding the profits made in their particular industry. When 
Capital has been paid, the minimum amount which will attract 
whatever supplies of it are necessary for the development of 
that industry, the remainder of the profits must be shared be- 



38 SELECTED ARTICLES 

tween Capital and Labor in an agreed proportion. It must be 
made worth while for every worker to do his best. In any 
arrangement come to, it would of course be necessary to safe- 
guard the interests of the consumer. 

4. Unemployment insurance on a scale which will free the 
workers from any danger of real suffering or privation through 
lack of work should be made universal and compulsory. Its 
cost should be distributed between the workers, the employers 
and the state, as it is in the insured trades. 

5. Parliament should at once pass an act making 48, or 
perhaps 47 hours, the maximum normal working week in all 
industries. Modifications, according to seasons, would be neces- 
sary in certain trades. 

Deprecates Superficial Remedies 

It may be urged by some readers that these are drastic pro- 
posals, but the position today is such that no superficial remedy 
will avail to bring about an industrial peace. Fundamental 
changes are called for. If we face the situation boldly and 
wisely, an industrial revolution whose consequences are wholly 
good, may be brought about by peaceful means. But if those 
who, in the past, have exercised an autocratic sway, buying 
labor as cheaply as possible, and scrapping it without a thought 
when it had served their purpose, insist on carrying into the 
new world the methods they employed in the old one, we shall 
still have a revolution, but it may well be disastrous both to 
Capital and Labor. 

Only if we make it clear that we realize the situation, and 
are already coping with it to the best of our ability, can we 
justly ask the workers to be patient, and to remember that 
Rome was not built in a day. I think that they could be per- 
suaded to patience if they could be quite certain that Rome 
was actually being built with all possible speed. But, rightly 
or wrongly, they suspect that the employing classes do not 
really mean business in the great task of creating a new and bet- 
ter England. Now this suspicion can not be exercised by 
promises or prophecies. In one way or another, our vast com- 
munity must actually pool its interests, and those must lead the 
way who have the most to pool. We have faced death, we 
must now face life, not as classes, not as sections, and not as 
individuals, but as a united nation." 



PROBLEMS OF LABOR 39 

WHAT'S WRONG WITH INDUSTRY? 1 

It depends upon one's point of view what answer is given 
to the question, "What's wrong with industry?" Even to-day 
there are probably some who would ascribe what is wrong to 
that bugbear of the complacent and comfortable, the "wicked 
agitator," who refuses to let well enough alone. There are others 
who, still impregnated with the social theory of the poor law re- 
formers of 1834, seek to find the root of the matter in the lazi- 
ness of the masses. Then, again, there are employers and 
others who hold the view that what is wrong with industry is 
the stubborn determination of trade unionists to cling to out- 
worn rules and practices. Others, again, trace all the industrial 
evils of to-day to the absence of protective tariffs. There are 
some bewildered employers, tossed about on the cross-currents 
of industrial thought and feeling, who frankly "don't know 
what things are coming to." 

There are obviously many defects in the industrial system. 
To those who seek to throw the chief blame upon the workers, 
we could retort that industrial statesmanship has been lacking, 
that employers have been short-sighted, that their methods have 
long been obsolete, and that they have been vastly overpaid for 
such services as they have rendered. 

But the chief defect of modern industry is that it has no 
moral basis. Perhaps in no government document has this been 
brought out more clearly than in the recently published Interim 
Report of the Committee on Adult Education, devoted to the 
bearing of industrial and social conditions upon the opportun- 
ities of citizens for education. 

The committee, over which the Master of Balliol presides, 
includes four trade unionists, two employers, two women, and 
several members prominently identified with various kinds of 
educational work, such as the Universities, the Workers' Edu- 
cational Association, the Adult School Movement, the Central 
Labor College, and the Cooperative Movement. The function 
of the committee is "to consider the provision for, and possibili- 
ties of, adult education (other than technical or vocational) in 
Great Britain, and to make recommendations." Its point of 
view is therefore human, and not economic; and it has put on 
record its ideas regarding industrial reconstruction from that 

1 Living Age. 299:588-90. December 7, 1918. 



4 o SELECTED ARTICLES 

standpoint. It is concerned with moral and not economic stand- 
ards. Much that is contained in the report is not new, but it 
is the first time that any government report has analyzed the 
conditions of industrial life in relation to personal development 
and social usefulness. The committee explains that it was 
driven to this line of inquiry because it was faced at the out- 
set with the grave obstacles which hamper workingmen and 
women in their desire for knowledge. 

In direct opposition to the dictum ''business is business,'' it 
proclaims the revolutionary truth that "industry exists for man, 
not man for industry." This sentence pricks the bubble of 
modern industry. The committee refuses to accept the view 
that "the exigencies of industrial efficiency are of such para- 
mount importance that the development of personality must 
inevitably and rightly be subordinated to them." This brings 
the committee very close to what is really wrong with the in- 
dustrial system, and the following quotation penetrates to the 
heart of the error : 

There can be no doubt that the degradation pi human beings to the 
position of mere "hands," and the treatment of labor as a commodity 
to be bought and sold, has created a revolt in the minds of a large sec- 
tion of the community. The conditions of industrial life have only too 
often outraged human personality. . . . While a very large proportion of 
the working population has not clearly formulated its fundamental ob- 
jections to the conditions and circumstances of industrial life, the articu- 
late minority is placing an increasing emphasis upon what may be called 
the moral factors. There is undoubtedly a growing feeling of dissatis- 
faction on the part of workpeople with what they regard as their position 
of inferiority. This inferiority, it is urged, is due to a forced sub- 
mission to undesirable conditions, to the subjection of the worker both 
to the machine and to the will of others, who are vested with an au- 
thority in which the workers have no share. The new currents of thought, 
which during the past few years have increasingly agitated Labor, are a 
sign of a deep-seated reaction against the dehumanizing influences sur- 
rounding industrial life. One of the most insistent demands made by 
the rising generation of workers is for what is called "industrial control." 
The view which they hold is that the subordination of the worker to an 
industrial policy and to regulations for which they are not themselves 
directly responsible is unjustifiable, because it is inconsistent with the 
rights and obligations which ought to be inherent in membership of any 
organized group within society. They believe that industrial democracy 
is as essential to individual freedom as political democracy. 

The movement is significant, because it gives evidence of a growing 
desire for new responsibilities. . . . From the point of view of both the 
individual and the community it is desirable that the new claims should 
somehow be met. 

The committee points out that it is beyond its scope to deal 
with the methods which should be adopted, but it is clearly con- 
cerned with "the fundamental criticism that the present indus- 
trial system offers little opportunity for the satisfaction of the 
intellectual, social, and artistic impulses." 



PROBLEMS OF LABOR 41 

The implications o£ the above quotation are far-reaching, 
and strike at the roots of modern industry. What is wrong 
with industry is clearly a moral question. The great need is 
not for increased output or protective tariffs, but for a revolu- 
tion in our attitude towards the economic system. The first 
need is to insure adequate remuneration, human conditions, and 
human relations in industry. And by human relations we mean, 
not the revival of benevolence and philanthropy, but the aboli- 
tion of those vital defects referred to above, and more particu- 
larly the inferior status of the worker. The new claims of the 
workers for responsibility must, as the committee agree, "some- 
how be met." This is the real problem of modern industry. It 
will be solved as the trade unions adapt their organization to 
the new needs, and as the demand for "industrial control" in- 
creases and becomes more coherent. In the meantime, the State 
must be called upon to redress the balance against the workers, 
and to establish such standards and conditions as are essential 
to a people with the responsibilities of citizenship. We may, 
perhaps, quote the words of the committee: 

We have approached the matters dealt with in our present report from 
the human rather than the economic point of view. If the individual is 
to make the most of his powers, if the citizen is to be worthy of the 
responsibilities thrown upon him by the ever-increasing complexity of life 
in a modern community, in other words if education in any meaning of 
the term is to become a reality, certain definite conditions of life are 
indispensable. The paramount consideration is that of the individual as a 
member of society. Material progress is of value only in so far as it 
assists towards the realization of human possibilities. Industry and com- 
merce and the social conditions which are in a large degree dependent 
upon them must in our opinion be regarded from this point of view, and, 
if they cramp the life of the individual, no amount of economic argu- 
ment will suffice to justify them. . . . We do not think, however, that 
there is of necessity a fundamental antagonism between ethics and eco- 
nomics. Adequate pay, reasonable hours of labor, the super-session of 
heavy, degrading, and monotonous forms of manual labor by machinery 
and improved processes, the provisions of holidays, the introduction of 
human relations and the social motive into industry, healthy homes and 
a cheerful environment — these are. the indispensable conditions of economic 
efficiency; they are also among »the elementary rights to which the citizen. 
as such, and in virtue of his responsibilities, is entitled. 

The committee make definite proposals, which strongly sup- 
port the expressed views of organized labor. The chief recom- 
mendations may be summarized as follows : 

1. The establishment of a normal legal working da}' of 
eight hours, with a shorter working day for those employed 
in heavy and exhausting kinds of work, or work accompanied 
by special disabilities. 

2. The close regulation and reduction of overtime. 



42 SELECTED ARTICLES 

3. The abolition of night work, except where it is abso- 
lutely essential. 

4. A guarantee of some reasonable security of livelihood 

5. The establishment of a legal annual holiday, with pay. 
The five points of this character alone, if adopted, would, at 

any rate, remove some of the worst features of industrial life, 
and liberate the energies of the people for the more funda- 
mental problems of life and society. The workers do not ask 
for concessions; they demand opportunities to enable them to 
work out their own salvation. What is wrong with industry is 
that it has deprived the workers of those opportunities of lei- 
sure, and the exercise of their powers. This is an evil which it 
must be one of the first tasks of reconstruction to eradicate. 



WHAT LABOR REALLY WANTS 1 

We American trades unionists take the present industrial 
system as it is. It evolved from something else, and it may 
devolve into something else again. In taking our position we 
are not constrained to say that we approve the capitalistic in- 
dustry. But here it is. We purpose to work with it and on it. 
Leave the rest — the future — to evolution. Our fathers intro- 
duced the democratic method into politics and it has gone on 
evolving democratically. Let us introduce it into industry and 
let it go on evolving democratically there. New times, new 
problems and new issues — but always the democratic method. 
There are certain things that we want now. We install our 
democratic method to deal with them. The same method will 
deal with what we want tomorrow. 

The essence of the democratic method simply is that labor 
shall have a duly acknowledged right to participate in determin- 
ing all regulation of wages and working conditions that affect 
it. Through its organization labor has democratic control of 
itself. Theoretically, at least, corporations are democratic or- 
ganizations of the owners of capital or its users. All right, 
then, let them settle their common affairs democratically. That's 
all there is to it. The method may take a thousand forms in 

1 From an article by John P. Frey, in the Metropolitan Magazine. No- 
vember 19 19. Mr. Frey is an executive officer of the International 
Molders Union and Editor of its official journal. 



PROBLEMS OF LABOR 43 

practice. The form may vary for each industry. The great 
thing is to secure the universal recognition of the democratic 
idea. I would not undertake to say, offhand, for instance, how 
the democratic method should be applied to the steel or any 
other industry. The principle is capable of infinite adaptation. 

The democratic method of dealing with labor questions is 
practised in many industries either locally or nationally, but 
lack of effective organization on one side or the other and fail- 
ure to accept the principle whole-heartedly has not afforded a 
fair test at all times. The principle is in practice in the coal 
mining and in the glass industry in a general way. But its most 
thorough-going acceptance on both sides and, therefore, its best 
demonstrative field, is in the stove-making industry. Let me 
tell you of the history of its growth and utilization in that in- 
dustry with which, as a molder, I am best acquainted. 

Stove-making is one of the oldest manufacturing industries 
in America; it was also one of the first in which labor organ- 
ized. Almost from the beginning the employers were organ- 
ized, and one of the purposes of their organization was to pre- 
vent the employes from doing likewise. Thus there was no 
common ground — as is the case with some of our great indus- 
tries today. It was a very bitter war that was waged in the 
stove industry from 1855 to 1890. Each side strove to secure 
its ends by might rather than by negotiation or convention. 
There was a complete denial of democracy, the attitude of the 
employers being the historic one of the industrial Bourbons: 
"This is our business and we will run it as we please." They 
even went so far in the seventies as to import large numbers 
of molder s from continental Europe. During all these years 
the industry was marked by such a succession of strikes and 
lockouts that there was almost no time when there wasn't one 
somewhere. One in 1866 and another in 1868 were almost na- 
tional in scope, the first being forced by the molders and the 
second by the foundrymen. Many of the foundries went into 
bankruptcy and many of the men lost their homes and were 
nationally blacklisted. Weary of this continuous and disastrous 
warfare, leaders of the Stove Founders National Defense As- 
sociation and of the International Molders Union began, finally, 
in 1890, to feel each other out. In 1891 a peace treaty was 
negotiated and ratified between the two national organizations. 

It was the first agreement of the kind in the history of the 



44 SELECTED ARTICLES 

world ; and it is highly significant that it has been entirely suc- 
cessful, though at the time it was received coldly and with 
suspicion by many of the employers and by a large number 
of the men. Each side questioned the good faith of the other. 
The scheme was unheard of, it was revolutionary, it robbed the 
employers of their business, it was absurd for workmen to think 
themselves capable of passing on any part of the business, etc. 

The agreement began by laying down the principle that as 
the foundrymen and the molders understood their common 
problems better than anyone else, arbitration by outsiders would 
be eliminated. There's where the democratic idea came in. 
They said : "We will provide a method by which we may settle 
our family differences ourselves. If we can't settle them no- 
body can." That is democracy in industry for you away back 
in 1891 — though nobody gave it that dignified appellation then. 
The treaty of peace was declared to be above the constitutions 
of either side. It was agreed that a committee of twelve, six 
from each organization, should meet together once every year 
not only to determine what the terms of employment — wages 
and hours — should be, but also the conditions of labor and the 
shop rules and regulations. These twelve men are the law- 
makers of the stove industry and they have been making laws 
successfully for 27 years — so successfully that there have been 
neither strikes nor lockouts in that period. They are repre- 
sentative of the whole industry and their laws are as demo- 
cratically made as the municipal law of the land. Being made 
by the industry for the industry and not forced on it by out- 
siders or autocratically imposed by one group of insiders, they 
are accepted in good spirit and obeyed, whether liked or not. 
If either side feels that the decision of the supreme body is 
unjust, it contents itself with waiting for any opportunity to 
repeal it just as political parties do in political life. Every ques- 
tion is settled by a majority vote. There is no umpire or 
referee. 

The committee views the industry as a whole ; each half 
understands the peculiar problems of the members of the other 
half. Having the broader view, the committee-men often find 
themselves more advanced than their constituencies. Such a 
situation is patiently manipulated or ''played." To make my 
meaning clear let me explain that sometimes one side will come 
into a meeting with a proposal that is so well backed by facts 
and reason that the other side immediatelv concedes its 



PROBLEMS OF LABOR 45 

righteousness. "But," they may say, "though this proposal is 
right, we must vote against its adoption at this time because our 
members do not agree with us. To adopt it under these circum- 
stances would be to invite trouble. Give us time to go back to 
our people and educate them up to this excellent proposal." 

I recall an interesting case in point. The molders had a 
venerable rule that the ratio of apprentices to journeymen 
should be one in eight. It was a protective measure, but the 
ratio had no intrinsic merit. Like many other things it stood 
because it always had been, and the molders regarded it as one 
of the pillars of their constitution. From the very beginning of 
our industrial democracy the foundrymen had rightly insisted 
that the rule was archaic, absurd and unsound because it repre- 
sented no normal relation, tended to reduce the actual number 
of molders and to restrict the proper growth of the industry 
At last, in 1901, the foundrymen's members of the committee, 
having absolutely proved to the satisfaction of the whole body 
that the}- were right, called for a showdown and a decision to 
change the ratio. Our members, nevertheless refused the de- 
mand because they knew, and so explained to the employers' 
representatives, that the men would not cheerfully accept the 
innovation and that there might be great and unpleasant difficul- 
ties in enforcing it. At the same time we pledged ourselves to 
go back to our members, tell them the facts and try to qonvert 
them. We did so and were promptly and decisively beaten by 
a referendum. When the 1902 meeting of the joint committee 
came around, the employers wanted to know where we stood. 
Somewhat shamefacedly, we had to confess that our people had 
not seen the light, but we asked for another chance. They 
gave it to us. We went back to our brother molders and began 
the missionary work all over again. We did our best, but to no 
avail ; the convention of 1902 turned us down coldly, greatly 
and keenly to our regret and embarrassment. 

The two organizations then faced a very delicate decision. 
Here was a piece of legislation that was vital to the industry 
and to the nation and the leaders were unanimous about it, 
but the employes could not be made to understand. The ques- 
tion was whether to wait still longer or terminate the treaty 
and settle the apprentice problem in a stand-up-and-knock-down 
fight between the two organizations. Such a fight would mean 
strikes and lockouts and the training of a new crop of non- 
union molders who would make- up a sufficient labor supply 



46 SELECTED ARTICLES 

and would eventually join the unions. Thus the men stood to 
lose their point in the long run. On the other hand the em- 
ployers would lose time and money and some of them would 
be ruined. On the whole, though, the foundrymen were in- 
clined to think that a fight was the lesser of two evils. Never- 
theless, we prevailed on them to wait another year. This time 
we carried the referendum and the apprentice question was 
satisfactorily adjusted. Doesn't that all have a fine old-time, 
town-meeting tang? Doesn't it appeal to the instinctive democ- 
racy of every American? 

The apprentice affair made us molders look like the bone- 
heads and obstructionists of this stove-making republic, but 
in another case the tables were reversed. About the same time 
along came some inventors and promoters with a molding ma- 
chine which, they said, would reduce the number of men re- 
quired and that none need be skilled, thus putting the union out 
of business for good. This idea appealed to many of the 
foundrymen in more ways than one. We didn't believe the 
machine was wholly practicable, but the employers thought we 
were merely taking a moss-back stand against the march of 
improvement and they finally installed the machines. The 
foundrymen believed that with the machines they had attained 
an improved industrial position which they must retain at all 
costs. The molders believed that the effect of the machines 
would be to deprive their families of bread unless they con- 
trolled their operation. The argument was not conducted in 
the best of spirit and there was much heat and friction. It was 
evident, however, that stoves would continue to be manufac- 
tured and that stove castings would continue to be made. For 
several years the questions raised by the advent of the machines 
were an open sore. In the end, however, patient application of 
the democratic method, established the sound basic principle 
that whatever the molding machines might accomplish in in- 
creased output and otherwise the molder's total earnings must 
not be reduced, and that his standard of living should not be 
lowered because of improved methods of production. It took 
two or three years more to get the principle into satisfactory 
practical application. Since then there has been no further con- 
troversy over the machines though to an appreciable extent they 
have replaced hand labor. In this dispute the molders were 
right and it took time to educate the employers. 



PROBLEMS OF LABOR 47 

WHAT DOES LABOR WANT? 1 

Amid all these stirrings and outbreaks of industrial trouble, 
what is it that Labor really wants? How many genuinely 
puzzled persons keep putting this question to themselves and 
one another, finding no satisfactory reply? It is pretty evident 
that these squabbles about meal-times, victimization, or even the 
exact increase of wages or shortening of hours, do not ade- 
quately represent the size and nature of the new demands that 
have been gathering in war-time and now clamor for satisfac- 
tion. On the other hand, we think it incorrect to assume that 
the extreme doctrines of Socialism or Syndicalism, embodying 
nothing less than the destruction of "the capitalist system/' with 
the conscious "class-war" as its weapon, are the animating mo- 
tives of any large section of the discontented workers or even 
of their leaders, save perhaps in one or two restricted areas of 
disturbance. Labor is not as yet demanding to "take over" and 
operate itself and for itself the mines, the factories, the rail- 
ways, and the workshops, and to portion out the landed property 
along the lines of Bolshevism. Conservative speakers and jour- 
nals that apply this measure to the present discontent do a grave 
disservice. 

But because the great body of workers have not clearly 
formulated the nature and dimensions of their demands, it does 
not follow that they do not know what they are "after." Their 
knowledge may not be complete or systematic, but it is not ob- 
scure. The experience of war-time has done not a little to 
clarify their vision of a better life for Labor and to suggest 
effective, though not always desirable, ways of attaining it. 
They want a secure standard of comfort on a considerably 
higher level than the pre-war scale — better food, houses, cloth- 
ing, and amusement, with a steady money wage large enough 
to buy them. They want more free time for home-life, rest, 
recreation. Their minds grasp the full meaning of that elusive 
word, education. They want a juster, freer State. And they 
want a "big say" as to the conditions under which they work, 
a release from domineering and over-pressure in the workshops, 
and a good security against arbitrary cuts of wage-rates and 
unemployment. Many of their new local leaders would doubt- 
less describe such a statement of Labor claims as quite in- 

1 The Nation (England). February i, 1919. p. 505-6. 



4 8 SELECTED ARTICLES 

adequate. But we believe that an industrial order which should 
secure these reforms for the workers would suffice to win in- 
dustrial peace. 

Now, can any decent-minded intelligent person assert that 
any one of these objects is undesirable? With the exception 
of the dwindling majority of the master-class who still cherish 
the desire to "keep the working classes in their place and not 
to pamper them," there will be a consensus of opinion in favor 
of this better life for the masses. It is clearly desirable, but is it 
economically attainable? Can we produce enough wealth to fur- 
nish forth this higher standard of living, and can we afford this 
longer leisure at a time when the destructive power of war has 
so impaired the stocks and fabric of industry as to impose upon 
us for some years to come the added work of reparation, in 
order that we may start where we left off in 1914? How, under 
such circumstances, can the workers have more wealth and 
more leisure? Many labor men have an easy solution of the 
problem in their view of capitalistic exploitation. Ample funds 
for making everybody comfortable are absorbed in the un- 
earned incomes of the rich. There is in this theory a quite 
sufficient element of truth to make it a thoroughly convincing 
doctrine to those who possess "the will to believe." But it 
will not convince those who face the facts and figures of the 
capitalist system. Our nation has never yet produced nearly 
enough wealth and leisure to make everybody comfortable, even 
if it were properly distributed. 

More wealth must be produced, and it must be more 
equitably distributed. We cannot get for all the life we admit 
to be desirable on any other terms. Hitherto there hasn't been 
enough wealth to go round, and carry comfort and content to 
every home. Unfortunately this statement is not merely un- 
palatable to the organized workers ; it is a dangerous irritant. 
It suggests to men who are asking for more relief from the 
strain of industry that they must work harder and bring about, 
as past experience seems to attest, a glut of goods which will 
lower prices, imperil wage rates, and cause unemployment. 
Now we hold that it is technically possible to get the needed 
increase of w r ealth and leisure for the workers, together with 
the improved status and security of employment, without a 
policy of speeding up or any risk of congesting the market. An 
improved equipment of machinery, the effective utilization of 
electricity and other sources of industrial power for manufac- 



PROBLEMS OF LABOR 49 

ture and transport, better business organization, the elimina- 
tion of wasteful forms of competition, the application of known 
improvements and economies, would enable us to double or 
treble our production of material wealth, if we were willing to 
apply them. 

What blocks the way? The poisoned atmosphere of mutual 
suspicion and the increased belief in force as a remedy which 
war leaves as a natural legacy. The enforced national unity 
of war-time is everywhere dissolving into factious quarrelling, 
nourished on innumerable stories of waste, jobbery, and cor- 
ruption. Great fortunes have undoubtedly been built up by 
scandalous profiteering. The growth of powerful combinations 
places an almost despotic power in the hands of capitalist in- 
terests. These things have been accomplished by the conni- 
vance, and in many instances by the aid, of the State, which 
during the war has entrusted the exceptional powers it acquired 
to the absolute discretion of the most successful profiteers in 
the several trades. To crown all, there is the exhibition of the 
new Government, hastily foisted on the bewildered nation, in 
which nearly all the levers of business control are in the hands 
of great capitalists whose past records and reputations do not 
suggest a disinterested public attitude to Labor and the con- 
suming public. Hence an attitude of irritability, and suspicion 
of all persons in authority, landlords, employers, officials, and 
Labor leaders. For one of the gravest symptoms of our pres- 
ent troubles is the weakened or lost control of the "authorized" 
trade-union officials over the movements of the local groups of 
workmen, and a growing distrust in the machinery for settling 
grievances as they arise in the staple industries. 

But employers have no small share of the responsibility for 
this unrest. Many of them have learnt neither humanity nor 
discretion from the difficult times through which the nation 
has been passing. In common with a large section of "society," 
they are wont to stigmatize as "slackers," "rebels," and "Bol- 
sheviks" the workmen who, rising to a new sense of their social 
and human value, are seeking to import that new sense into a 
reformed industrial system. In every industrial area these stub- 
born, masterful employers are impediments to industrial peace, 
and defend their control of their businesses in the same spirit 
and by the same weapons as the more revolutionary leaders of 
the men. Everywhere these supporters of conscription, protec- 
tion, monopoly, and industrial absolutism are contributing to the 



50 SELECTED ARTICLES 

peril of the post-war situation, girding now against "agitation," 
now against taxation of war profits, and contriving to use Gov- 
ernment to keep up prices. 

The perils are imminent and growing. Can the great basic 
principles of democracy and self-determination, which are being 
invoked as peace-makers in the larger area of international re- 
lations, bring no healing influence upon this internecine strife? 
Is it impossible that these suspicions and conflicting interests 
should "get together" and establish instruments of concerted 
counsels arid government for industry? If the Whitley Coun- 
cils are not perfect instruments for self-government in such 
trades as engineering, could they not be taken as foundations 
of a better order within the trade and the workshop? Is not 
Mr. Clynes's bolder proposal of an Industrial Parliament, to 
which large issues of labor and other economic policy might be 
entrusted for discussion and even legislation b}^ trade represen- 
tatives, worthy of early and close consideration? For the root 
of the trouble is that men turn to selfish, shortsighted, and 
forceful methods because they see no obviously just and rea- 
sonable way of redressing real grievances or attaining what 
seem fair demands. No deus ex machina, no compulsory arbi- 
tration by Board of Trade officials, can impose industrial peace 
upon the warring elements. We do indeed favor a large inter- 
vention of Government in the industrial order. We think, for 
example, that the time has come to fix an eight hours' day as 
the normal standard of work. And we believe also in a real 
experiment in representative government, such as we under- 
stand Mr. Clynes to propose. To such a body the conflicting 
claims, not only of Capital and Labor in the several trades, but 
of the several trades in their "pulls" upon the national dividend 
of wealth, leisure and other economic goods, can be referred. 
It might sanction industrial regulations for all matters in which 
there is a real community of interests, and initiate the new 
era of social peace without which no League of Nations can do 
more than shift the areas and change the methods of human 
conflict. Co-ordination is perhaps not a particularly attractive 
term. But it marks a first essential to any real solution of 
these tangled problems. So long as each department of Gov- 
ernment, each trade and each business interest, finds in the 
assertion of its own separate "will to power" the only way of 
getting what it wants, the nation will flounder on in a deepening 
morass of economic trouble. 



COST OF LIVING 



COST OF LIVING AND WAGES 1 

How far and on what principles should wages be adjusted 
to the cost of living? The question has been before the Amer- 
ican people for some time, and now more than ever calls for a 
clear and discriminating answer. It is by no means simple, and 
the answer cannot be given offhand or in unqualified terms. 

Two cases are to be distinguished. First, there may be 
changes in prices due to general causes, influencing all commo- 
dities in much the same way, and showing a steady trend over 
a considerable period. Second, changes which are due to special . 
causes (such as seasonal fluctuations of crops). These are 
most conspicuously seen in farm and garden produce and are 
not so steady, but are liable to be checked or accelerated within 
a comparatively brief period. 

First — the case of general changes in prices, such as all the 
world has experienced since the beginning of the war. There 
had been some general advance for many years before, ever 
since the beginnig of the century. Prices went up from 1900 to 
1914; but they went up more, and more rapidly, after 1914. In 
the United States the advance has been particularly great since 
1917, when we entered the war. There has been inflation every- 
where; prices have risen the world over. 

Whenever such a general rise has taken place in the past, 
wages and like incomes have failed to rise as quickly. Wages 
have lagged behind prices, and wage receivers have been worse 
off during the period of lag. All of them do not suffer equally 
under such conditions. Some even gain ; the wages of some go 
up for a time more than prices, not less. This is likely to hap- 
pen in the industries which are specially subject to govern- 
ment demand. But wages in general do not usually advance as 
fast as prices during periods of inflation. The advance has 

1 By Frank W. Taussig, Professor of Economics, Harvard University. 
Collier's. 64:13. September 27, 19 19. 



52 SELECTED ARTICLES 

always been slowest with the salary incomes received by per- 
sons who have a considerable fixity of tenure, such as teachers, 
public employees, corporate and government officials. If the 
higher scale of prices lasts a long time, wages and salaries 
everywhere eventually are adjusted to it. But often there is a 
reaction before the adjustment is completed. Prices go down 
again or shift in irregular ways; and hence it may happen that 
the wrongs are never put right. 

Wrongs they are. Wages should be adjusted promptly and 
fully to changes in general prices. The failure to do so is one 
of the greatest evils of inflation. True, when there are violent 
price fluctuations, this adjustment often is very difficult to 
make. Even when the fluctuations are more moderate, it takes 
time to mark and measure them and act accordingly. But the 
principle is clear : everything that is possible should be done to 
prevent the lag. There should be accurate and up-to-date statis- 
tics of wages and prices, well-organized labor boards, quick 
and just action. 

The Cause of "Fluctuations" 

One of the good sides of modern development is that this 
principle is not only accepted universally but is acted on more 
completely than at any previous time. Governments and em- 
ployers have gone farther toward its application than ever be- 
fore; the wrong has been probably less than ever before. The 
improvement has been due partly to awakened social responsi- 
bility, partly to the activity of organized labor. There has been 
great mitigation of this kind of injustice, even though the right- 
ing is not complete. 

The second case is not so easily disposed of. Suppose there 
is no change in general prices, but an advance in some things 
largely consumed. When people speak of the "cost of living" 
they have in mind chiefly the prices of the food staples. Flour 
and bread, meat, vegetables, and fruits, are subject to fluctua- 
tions of their own. The purchasing power of money wages ap- 
plied to food may become less, even though in general money 
buys as much as before. The same discrepancy between money 
wages and food prices occurs when all prices go up, and wages 
go up correspondingly, but food goes up even more. And the 
reverse situation may arise and does arise: food prices going 
down, when general prices are stationary; or, when other prices 



PROBLEMS OF LABOR 53 

are declining, food prices going down less. What then? Should 
wages move up and down in prompt and complete accord with 
each and every change in this important but not all-inclusive 
element in the cost of living? 

The cause of fluctuations in food prices is usually to be 
found in crop changes. When the wheat crop is large the 
world over, bread and flour become cheaper; when it is scant, 
the}- become dearer. When our corn crop is good, bacon, ham, 
pork, and beef fall in price; when it is poor, they rise. Now 
it is evident that no adjustment of wages can smooth over 
these fluctuations. When the wheat crop is short, there is so 
much to be had and no more. The world cannot then con- 
sume the same amount as during a full season, for the simple 
reason that there is so much less to go around. To raise wages 
by paying more money to every workman, and (as in justice 
should of course be done) to every other person, would mean 
simply still higher prices of the food, not more food. It is 
quite impracticable to put wages up and down according to 
seasonal shifts in food prices. Possibly supplies can be ad- 
justed, through carry-over from season to season; but this, so 
far as it can be done (there are limits), serves to obviate the 
very occasion for trying to adjust wages. 

Feeding the World 

There is another sort of case in which no fair adjustment 
can be obtained. This is in times of erratic and sudden 
changes. Such changes may be due to speculative manipulation, 
or to the plain fact of the world being in a turmoil. The two 
causes often are at work at the same time; speculation is rife 
precisely when the world is upset. Then the ups and downs of 
all prices are unsteady and unpredictable, and the prices of sea- 
sonal products are most of all unsteady. Any adjustments 
made under such conditions to to-day's prices are likely to 
prove maladjustments to-morrow. Of course these are evil 
conditions. Every effort should be made to prevent them from 
arising, and to put an end to them when they do arise. 

What now are present conditions? 

So far as the general and sustained rise in prices goes, the 
answer is simple. Of course wages should go up to the extent 
that prices have gone up. There are statistical difficulties— just 
in what way measure the changes in prices? what places and 



54 SELECTED ARTICLES 

what occupations should be taken as typical and standard for 
wages? and so on. Yet between fair-minded men there is noth- 
ing hard to straighten out. 

But when it comes to the prices of food products, and in 
general the matter of abnormal and freaky prices, our present 
conditions present knotty problems. Consider the food situa- 
tion as it stands. There is no crop shortage in the United 
States. Our wheat crop is well above the average, though not 
so superabundant as was expected at the beginning of the year. 
The corn crop is about average, but is excellent in quality. Our 
meat products are as plentiful as visual. Yet wheat sells at the 
high price which the Government has guaranteed to the farm- 
ers. It sold for even more during the spring; and the Grain 
Corporation (the Government's agent) does not find it easy 
to keep the price down to the guaranteed figure. Corn, which 
is quite unregulated, tends to soar; and so do meats, in 
sympathy. 

All these high prices could not be- maintained in face of the 
adequate domestic supplies if it were not for the foreign de- 
mand. Though there is no domestic shortage, there is a world 
shortage. We are helping to feed the world, and the world is 
bidding for our food. And we are not only helping to feed 
the world, but are helping the world to bid against us for our 
own products. We are lending to foreigners — financing their 
purchases. We do so not merely because some individuals 
among us find it profitable, but because the country as a whole 
approves. 

The Government itself appropriated large sums to help feed 
the foreigners. Private loans now continue to finance the pur- 
chase. Through it all we ourselves, as a body, have used our 
own funds to enable the world to bid for and buy our own 
food supplies. 

Go Slow! 

Perhaps we are making a mistake. Perhaps we should keep 
our food for ourselves, or so much of it as to maintain food 
prices here at a lower level. The way to do so would be to 
stop or restrict exports by an embargo. The proposal has been 
made, but never pressed. There is substantial agreement that 
we should continue to contribute to feeding the world so long 
as the acute needs persist. Partly we all feel that this is right; 



PROBLEMS OF LABOR 55 

partly the agricultural producers want it in their own interest. 
Certain it is that our prices are kept up not only by our own 
purchases but by the foreign purchases which for the time being 
we are backing. 

Such a situation is unstable. It cannot endure indefinitely. 
The world will come back sooner or later to a more natural 
state. Crops abroad will be sown and reaped about as before. 
Government guarantees will run out. The speculative flurries 
started by the abnormal conditions will also calm down — not all 
speculative or market fluctuations, but those due to the uncer- 
tainties and irregularities of the moment. How soon the shift 
to more normal conditions will come, no one can say. Nor can 
anyone say by what process it will come; whether by a sudden 
overturn, as is quite possible, or by a gradual transition. All 
we can be sure of is that the world now is out of joint. 

So long as the instability and uncertainty last, it would seem 
the part of wisdom to go slow in fitting wages to this quarter's 
or that quarter's food prices, or to a cost of living in which 
present prices play a dominant part. The smoother and more 
sustained movement of general prices can be followed in 
adjustments of wages. I believe too that special care should 
be taken for maintaining or raising the money wages of the 
poorest groups of workers — those to whom most of all the price 
of food is a crucial matter. 

For the rest we must face the fact that the world is going 
through a period both of economic shortage and of social fer- 
ment. Inflation is probably at the top notch. This unstable and 
uncertain situation may continue for some time; perhaps for 
months, in my judgment hardly for another year. But until 
the present crop season is over we had better go slow and 
make no changes likely to be of enduring character. Nothing 
that is expected to last should be built on a shifting foundation. 

All of the above refers to one phase only of wages prob- 
lems; namely, the way in which money wages should be adjusted 
to changes in prices and in the cost of living. Back of all de- 
bate on this matter lies the controversy at large between em- 
ployees and employers. Labor wants enough in any event to 
offset higher prices. But it wants still more, if more can be 
got. Not only does it want more so far as is possible under 
existing industrial organization : it is ready to urge radical 
changes in society if radical changes are necessary in order to 



5 6 SELECTED ARTICLES 

secure more. Here are fundamental questions that will remain 
with us long after the special monetary questions of the pres- 
ent are forgotten. They are questions that must be faced 
squarely; and they cannot be settled by any statistical devices 
or arbitration machinery. They must not be confused with the 
special problem of the moment — the interrelation of prices, cost 
of living, and steadiness in the purchasing power of money 
wages. 



MEASUREMENT OF THE COST OF LIVING 
AND WAGES 1 

The great upheaval in prices during the past two or three 
3-ears has forced into the spotlight of public, interest the stand- 
ard of living as a basis of wage settlement. The cost of living 
has risen quite suddenly and most dramatically, and unless 
wages rose with the rise in prices the net result was an actual 
lowering of the standard of living. For this reason the stand- 
ard of living has become in a great man}^ cases the basis for 
setting wages. 

Thus the Shipbuilding Labor Adjustment Board has on 
three occasions raised wages to the extent that the cost of liv- 
ing has risen, having done so on each occasion only after an 
extensive survey and measurement of the increased cost of 
living has been made. The National War Labor Board in 
nearly every case that has come before it for settlement has 
considered evidence and testimony on the increased cost of liv- 
ing. In perhaps half of the cases they have made a settlement 
of wages directly on the basis of the increased cost of living, 
and in many of the cases specific provision has been made for 
the future readjustment of wages on the basis of changes in 
the cost of living. The Railroad Wage Commission based a 
recent raise in wages on the results of a special nation-wide 
survey into the extent that the cost of living had risen. A 
number of private employers have raised wages after having 
had special studies made to determine the extent of the in- 
crease in cost of living. A few companies have made provision 
for periodic (in some cases monthly) increases of wages, in 

x By W. F. Ogburn. Annals of the American Academy. 81:110-22. 
January, 19 19. 



PROBLEMS OF LABOR 57 

accordance with the percentage increases in the cost of living. 
Some of these companies are the Bankers* Trust. Co. of New 
York City, The Index Visible (Inc.) of New Haven, Conn., 
the Oneida Community, the Kelly-How-Thompson Co. of Du- 
luth, Minn., the George Worthington Co., and the Printz-Bieder- 
man Co. of Cleveland. 

During the period of reconstruction following the war, if 
prices should continue to rise, there will be further adjustments 
of wages on the basis of rising prices. If, on the other hand, 
prices fall, it is certainly very desirable that wages should not 
fall more than prices. In either event the changing cost of liv- 
ing will be a prime factor in determining wages, and during 
the period of reconstruction, social and industrial conditions are 
likely to be such as to need the guiding hand of a strong pub- 
lic policy. Such a public policy must surely consider the stand- 
ard of living in an} 7 directing or control it may employ on the 
course of wages. 

This enhanced importance of cost of living as a factor in 
wages occasioned by the war and reconstruction, makes it quite 
desirable to set forth not only some of the facts of recent changes 
in the standard of living, but also some of the concepts involved 
which are not wholly clear to the general observer. Further- 
more, as the setting of wages by standards of living depends upon 
the accurate determination of the standard of living, it is also 
desirable to show something of the technique that has recently 
been evolved for measuring this complex phenomenon. For only 
by such knowledge can the issue thus raised by demobilization 
be met. 

In June of 1918 the cost of living had risen around 55 per 
cent over the pre-war period. I have spoken of June of 1918 
as a point of measurement, because a number of studies were in- 
dependently made of the increase in the cost of living up to ap- 
proximately this time, and thus there was not only abundant 
evidence on the increase in the cost of living but the results 
were in considerable conformity as to the exact percentage of 
increase. These studies were made by the U.S. Bureau of Labor 
Statistics, by the Shipbuilding Labor Adjustment Board, by the 
Railroad Wage Commission, by the National Industrial Con- 
ference Board and by the National War Labor Board. Since 
June, 1918, the measurement of cost of living has been carried 
on by the U.S. Bureau of Labor Statistics in various localities. 



58 SELECTED ARTICLES 

These results of the bureau are not yet fully tabulated, but upon 
the basis of data collected in fifteen shipbuilding centers for 
August, 1918, the average increase up to that time over 1914 
was 65 per cent. 1 

These figures are not based on wholesale prices, which fluct- 
uate somewhat more widely than do retail prices, nor on food 
alone, which is only about 40 per cent of the budget, but are 
based upon food, rent, fuel and light, clothing and sundries. 
The increased cost of living is found by combining the increased 
cost of each of these five classes of expenditure, after the in- 
creased cost of each class has been weighted according to its 
relative importance in the budget. 

The increase in the price of food is found by taking an 
average of the increase (or decrease) in some thirty or forty 
articles of food, each weighted according to the amount spent 
on it. For a particular locality, prices of each article are taken 
from eight or ten stores. Food in October, 1918, has increased 
75 per cent over the average price for 1914-1915. 

The increase in rent for a town or city is found by taking a 
sample of from 500 to 2,000 houses or apartments, located pro- 
portionally in all the districts where workingmen live and find- 
ing the average change in rent of these dwellings over the 
period studied. The increase in rent has not been so rapid nor 
so great as the increase in most other items of the budget. The 
changes in rent vary widely from locality to locality. Thus in 
Detroit from December, 1914, to March, 1918, rent increased 38 
per cent, while in Jacksonville from December, 1914, to August, 
1918, rents fell one per cent. 

The problem in measuring the increase in fuel and light lies 
chiefly in weighting the changes in price according to the extent 
that each type of fuel and light is used by the community. In 
general the increase in coal and wood has been nearly the same 
in most areas, while changes in rates for gas and electricity 
vary somewhat by locality. Gas and electricity have usually not 
changed so much in price, increasing by no great percentage and 
in rare instances falling slightly. From December, 1914, to 
August, 1918, fuel and light have increased from 25 per cent 
to 45 per cent, in most cases being near the latter figure. 

Clothing has increased to the greatest extent of any general 

1 The increase in cost of living for New York City up to December 
19 18 (over December 19 14) has been computed and is 75 per cent. 



PROBLEMS OF LABOR 59 

class of expenditure, ranging from 125 per cent to 70 per cent 
over the pre-war period to August, 1918, in general the increase 
being around 95 to 100 per cent. The increase in the price of 
clothing is measured by getting the prices on about seventy-five 
articles of clothing used by various members of the family from 
eight or ten stores in the locality, in each store getting the prices 
if possible on four or five leading sellers representative of each 
article of clothing. The increases over the period studied for 
each of these articles of clothing are then weighted according 
to the amount spent for them by the average family, and the 
average increase is then found. 

Sundries include expenditures for insurance, organizations, 
furniture and furnishings, education, amusement, sickness, car- 
fare and various miscellaneous expenditures. The increase in 
sundries is most difficult to get because of the difficulty of get- 
ting proper weights and enough large samples for each locality. 
Most of the studies made have not measured the increase in 
sundries adequately. From the few careful studies made of 
changes in prices of sundries, it seems they increase at about 
the same percentage as the total of the items of the budget. 

Some idea of the variation in the increased cost of living in 
different localities can be had by noting the following figures 
for the increased cost of living in various shipbuilding centers 
from December, 1914, to August, 1918, made by the U.S. Bureau 
of Labor Statistics : Baltimore, 80 per cent ; Norfolk, 75 per 
cent; Bath, Me., 68 per cent; Philadelphia, 67 per cent; Ports- 
mouth, N.H., 67 per cent; Chicago, 65 per cent; Boston, 65 
per cent; Jacksonville, Fla., 63 per cent; Portland, Me., 63 
per cent; Toledo, Ohio, 63 per cent; New York, 62 per cent; 
Superior Wis., 60 per cent; Beaumont, Tex., 60 per cent; Sa- 
vannah, Ga., 58 per cent; Mobile, Ala., 56 per cent. Perhaps 
more variation is shown by these figures than really exists, 
because the month of August is an unsatisfactory month to get 
prices in, as in some cities the autumn prices are quoted and 
in others the prices of a former season are quoted. Thus when 
the month of January, 1918, was taken as the point to which to 
measure the increased cost of living from December, 1914, the 
variation was only from 40 per cent to 48 per cent for fifteen 
shipbuilding centers. In shipbuilding centers and localities 
doing large amounts of war work, perhaps the increase is 
slightly greater than in other cities, because in many of these 



6o SELECTED ARTICLES 

centers of war industries, rent has increased more than in other 
places. Of course most cities have been doing some war work 
and this difference in rent must not be unduly pressed. The 
rise in food, clothing, fuel and certain sundries seems to be 
general irrespective of locality. 

In this manner, then, the increased cost of living has been 
determined for a definite period and for particular localities for 
the purpose of increasing wages by the same percentage of in- 
crease that the cost of living has shown, thus enabling the same 
standard of living to be maintained. But in a number of cases 
this process of raising wages has been unsatisfactory because it 
is claimed that the standard of living in the pre-war period 
which was used as the basis for computing an increase was too 
low. And certainly a number of American wage-earners were 
endeavoring to live on less than a minimum of subsistence in 
the pre-war period. The problem then becomes one of de- 
termining what is a proper standard of living. To raise wages 
according to the increase in the cost of living is in some cases 
not an adequate method of setting wages, and in these cases 
wages can be settled satisfactorily only by considering the 
standard of living as well as the increased cost of living. 

The problem in such an event then is to determine the proper 
standard of living. Up to the present time attempts have been 
made to measure three different levels of living. 

The first of these is what might be called the poverty level 
and for which there have been drawn a number of budgets, 
principally by various charity organizations and philanthropic 
societies. Families living at this level receive charity in the 
form of gifts or free medical service or in other ways. Or if 
they do not do this they attempt to live on a level so low as to 
weaken them eventually to such an extent that disease in- 
evitably overtakes them. 

The level above the poverty line is called the minimum-of- 
subsistence level. This level varies of course from country to 
country. It is spoken of here as the American standard, it being 
realized that it varies somewhat in different parts of an area so 
large as the United States. The minimum of subsistence will 
also change over a period of time, irrespective of the level of 
prices. What was the minimum of subsistence a number of 
years ago is certainly not a minimum of subsistence now. Quite 
a number of budgets have been set for this level in previous 



PROBLEMS OF LABOR 61 

years. The study made by Dr. Chapin in New York in 1907 
set such a level. Another was the budget of the New York 
Factory Investigating Commission in 1914. Such a standard 
of living corresponds approximately with that of common or 
unskilled labor, and is what is generally referred to as a living 
wage. 

There has also been a tendency to recognize still another 
level which has been called the minimum comfort level, which 
is of a plane somewhat higher than that of the minimum of 
subsistence. Thus in the autumn of 191 7 in Seattle the arbitra- 
tion board in a strike of the street railway employes accepted 
a budget of $1,500 for a family of five. The settlement was 
made on the basis of a budget, drawn after considerable study, 
and called the minimum comfort budget. 

The poverty budget at the charity level is chiefly of con- 
cern to charity organizations, and it is hoped that less and less 
attention will have to be paid to this type of budget. On the 
other hand, the budget at the level of the minimum of subsis- 
tence is of the utmost importance because it determines the line 
below which American families ought not to be allowed under 
any circumstances to sink. In some localities, sufficient careful- 
study has been made of the minimum of subsistence by various 
students to lend considerable confidence to the accuracy of 
their results. Thus, in 1907 in New York City, Dr. Chapin 
after a very careful study said, "An income under $800 is not 
enough to permit the maintenance of a normal standard. An 
income of $900 or over probably permits the maintenance of a 
normal standard, at least as far as the physical man is con- 
cerned. ,, For 1914 in New York City the New York Factory 
Investigating Commission set a minimum-of-subsistence budget 
at $876. And in 1915 the Bureau of Personal Service of the 
Board of Estimate and Apportionment of New York City made 
a minimum budget estimate for an unskilled laborer's family 
in New York of $845. These budgets therefore approximate 
the minimum of subsistence for New York City before the 
present great increase in the cost of living, which was first 
markedly noticeable in the late summer of 1915. If the mini- 
mum of subsistence in pre-war times was between $850 and $900 
for a family of five, what is it now since the great upheaval in 
prices? 

A good deal of investigation has been made on the prob- 



62 SELECTED ARTICLES 

lem of what is a minimum of subsistence in America today 
by the cost-of-living department of the National War Labor 
Board. In the early summer of 1918 this level was described 
by a budget drawn up item by item. This budget was based 
largely on data collected by the U.S. Bureau of Labor Statis- 
tics, and was worked up in consultation with various experts. 
This work showed that for a family of five to maintain the 
minimum of subsistence in a large eastern city in June of 1918 
an income of $1,380 was necessary. Approximately this esti- 
mate was confirmed by a totally different method of approach, 
namely, by applying the percentages of increase in cost of liv- 
ing to well-recognized budgets worked out in former periods. 
The increase in food, in rent, in fuel and light, in clothing and 
in sundries was added to the estimates in former budgets, and 
so brought up to date. Thus, Dr. Chapin's budget for New 
York City in 1907 would cost in June, 1918, $1,390. The budget 
of the New York Factory Investigating Commission would cost 
$1,360 and that of the New York Board of Estimate would 
cost $1,320. It is possible to use still another method of esti- 
mating the minimum of subsistence. In minimum-of-subsistence 
'budgets food usually costs about 44 per cent of the total, so if 
we know the cost of food we can estimate the total budget. 
The U.S. Bureau of Labor Statistics collected 600 dietaries in 
the New York Shipbuilding district, which cost on the aver- 
age $607 a year, the families averaging 3.6 equivalent adult 
males. Upon analysis this average dietary based on 600 cases 
yielded only 3,155 calories per adult per day, not allowing any- 
thing for waste. So if we consider $615 as the cost of food 
per year for a family of 3.4 equivalent adult males, we get 
a total budget of $1,390. It seems fairly clear then that in 
June, 1918, the minimum of subsistence for a family of five 
living in a large eastern city was from $1,350-$ 1,400. If the 
cost of living since June, 1918, to the present time (November, 
1918) has risen 10 per cent, then the minimum of subsistence 
at the present time costs about $1,500 for a family of five in a 
large eastern city. 

Not very much attention has been given to standards of liv- 
ing above the subsistence level for the purpose of setting 
wages. But the department of the National War Labor Board 
on the cost of living drew up for the consideration of the 
board a budget above the subsistence level which was called the 



PROBLEMS OF LABOR 63 

minimum comfort level. In June, 1918, the cost of this budget 
was $1,760 per year for a family of five. These facts will give 
the reader fairly good ideas of various levels of the standard 
of living since the great change in prices. 

The importance of the standard of living as a factor in 
determining wages during reconstruction will probably occasion 
a good many attempts to define and measure the standard of 
living in various industries and in various parts of the country. 
Such a probability makes it desirable here to develop some- 
what the concepts involved in the standard of living and the 
method of determining proper standards. 

The general reader is not at all times fully aware of the 
following concepts. A standard-of -living budget for wage- 
earners is thought of by some, and erroneously so, as fitting 
a particular individual family rather than an average family. 
But budgets for the purpose of wage adjustment are drawn 
not for a single family but for a group of families. Hence the 
items of a budget should be average items. Thus in a partic- 
ular community the men in some families will ride on the 
street car twice a day for every work day in a month. Men 
in other families will not ride to and from work at all. So 
an average budget for such a community might put down 
expenditures of the man for car fare for thirty car rides a 
month, although no man in any family would ride exactly this 
number of times a month, no more and no less. It is rather 
an average expenditure of those who ride to work and those 
who do not. Similarly, the number of suits of clothes bought 
per year might be expressed in fractions. Items of expendi- 
ture are therefore generalized. It follows from the above 
analysis that items of expenditure should not be set at the 
lowest possible figure for an individual but for the group as a 
whole. Thus some men may need only 2,500 calories a day 
while some will need 6,000 calories, the average for a man at 
moderately hard work being probably 3,500. 

Another conception necessary for a clear understanding of 
setting wages by constructed budgets is that budget estimates 
must not be ideal. It cannot be assumed for instance that a 
housewife has the expert training of a domestic science ex- 
pert. Nor should budgets be constructed without an allow- 
ance for tobacco, when we know that it will be impossible 
practically for a community to live according to such ideal 



64 SELECTED ARTICLES 

rules of expenditure. On the other hand it seems questionable 
whether such constructed budgets should conform absolutely 
to practice. The expenditure in actual practice will be a func- 
tion of the income received and as the income is what we 
want to determine, there is danger of getting in a circle. For 
instance, families of a group of workmen may spend only $18 
a year for sickness; whereas they should spend more, as we 
know from data gathered in sickness surveys that they need to 
get more medical attention than $18 will buy. Budget estimates, 
however, should conform fairly closely to practice. 

Budgets are usually constructed for a family of husband, 
wife and three children. This custom is justified on the grounds 
that public policy should encourage early marriage and that 
to prevent the population from decreasing, at least two chil- 
dren should be reared to parenthood. 

Formerly budget estimates included chiefly food, rent, fuel 
and light, and clothing; other items were neglected to a great 
extent. Food, shelter and warmth were thought of as the 
minimum of subsistence. We now know that food, shelter and 
warmth are not the only necessary needs. And so considerable 
attention is being paid to other items of expenditure in budget 
making. For instance if we find large numbers of families who 
do not get enough food and who do not get medical attention 
when sick, yet frequently attend moving picture shows, the 
proper conclusion would seem to be that recreation is a neces- 
sary need as truly as food, and we know that in American 
life recreation costs some money. Hence expenditures for 
recreation should be written into a minimum-of-subsistence 
budget. And so it is with sundry items. 

To some persons not familiar with budgetary studies, the de- 
termination of the level of subsistence seems a matter of opinion 
rather than of science. But there are many scientific approaches 
to the problem and various ways of eliminating the personal 
bias. This method cannot be gone into at length here but some 
of the devices used for locating the point of subsistence may 
be set forth briefly. 

The food requirement can be found by subjecting to food 
analysis a number of actual dietaries. The cost of that dietary 
actually used which furnishes the requisite number of calories, 
grams of protein and the necessary chemical constituents will 
be set as the minimum amount of expenditure for food for 



PROBLEMS OF LABOR 65 

subsistence. The amount for rent can be estimated by select- 
ing a standard house of, say, four or five rooms with bath and 
finding the average rental for various localities in the commun- 
ity. Or if a number of budgets have been collected, the mini- 
mum rent may be determined at a point where overcrowding 
ceases to exist, having determined some standard for over- 
crowding, as for instance one or one and one-half persons to 
a room. Perhaps a fair method of determining the fuel and 
light necessary is to compute for various types of heating ap- 
paratus in houses of a certain size the amount of fuel and light 
used by families that are known to be just above the poverty 
level but clearly so. The minimum of subsistence in "clothing 
is perhaps most difficult to determine. The usual procedure is 
to adopt a certain estimate of clothing upon which there has 
been a fair amount of agreement, such as one overcoat every 
three years, one hat a year, one cap a year, one suit of clothes 
a year and so on. At this time of changing prices it is difficult 
to express these units in price terms which will show agree- 
ment. If a number of family schedules have been collected, it 
is possible to l6cate a point where the expenditure of clothes 
for the wife is say 75 per cent of the expenditure for the cloth- 
ing of the husband, or some such point agreed upon. It is 
known for instance that when the clothing allowance is too low, 
the expenditure for the wife's clothing is only a small per- 
centage of the expenditure for the husband's clothing, and that 
when the allowance for clothes is bountiful that the expenditure 
on the wife's clothing equals or exceeds that for the husband. 
There is no general rule for determining the amount necessary 
for sundry expenditures. The amount for car fare is broken 
into three classes, that necessary for the husband to spend in 
going to and from work, that necessary for children to go to 
and from school, and other car fare ; in this way the amount 
can best be approximated. The amount for sickness can be 
estimated from a study of the average number of days of sick- 
ness a year. There are also various ways of getting expert 
testimony on the amount of insurance necessary. And so one 
can set a minimum standard throughout the items of the budget. 
Considering the budget as a whole, there are various guide 
posts that readily tell when the poverty line is passed. Usually, 
gifts of clothing are indicative of poverty. So also, the method 
of obtaining fuel, known as "gathering fuel" is often an index 



66 SELECTED ARTICLES 

of poverty. The point also at which the family ceased to be in 
debt is significant. Thus in the District of Columbia in 1916 
families with incomes lower than $1,150 were on the average in 
debt. Usually all these various tests converge upon a particular 
income and this is spoken of as the minimum-of-subsistence 
standard. 

Formerly, budgets determining standards of living were ex- 
pressed only in prices. Now, however, at a time when prices 
are changing very rapidly, a budget expressed in prices is not 
very intelligible and will be less so the further back the period 
which it represents. The need is therefore quite manifest for 
a budget expressed in quantities as well as in prices, and the 
items should be described also as fully as possible. It is greatly 
to be hoped that future budget studies will be in terms of quan- 
tities adequately described. Furthermore, the more fully a bud- 
get is described, the more accurate is the measurement. 

Enough has been indicated to show what sort of measure- 
ment is necessary if the standard of living is to be used in wage 
settlements. A budget study of a particular community is quite 
a difficult undertaking, involves considerable technicality and is 
quite expensive. In a country as large as the United States and 
possessing so many localities where wages may be adjusted on 
the basis of the cost of living, it is an impossible undertaking to 
make a budgetary study in every community. It would seem 
that such a difficulty could be met by estimating the cost of liv- 
ing in a city for which we have no budgetary study and by 
finding the price differential from a city for which we have 
budgetary studies. In the wage adjustments of the National 
War Labor Board during the war a very great need was felt 
for some quick method of determining the differential in cost 
of living between one city and another. For instance, the wage 
may have been set in Philadelphia for street car employes on 
the basis of the cost of living. It is also desirable to set wages 
in New Orleans for street car men, but there is no cost of living 
study in New Orleans. It would be much simpler and easier to 
set the wages in New Orleans if such a differential were known. 

But so far there seems to be no quick way of telling how 
much less it costs to live in New Orleans than in Philadelphia, 
except by full budgetary studies. It would seem that the way 
to measure this differential would be to get the prices of an 
extensive list of commodities such as food, clothing, rent, etc., 



PROBLEMS OF LABOR 67 

in Philadelphia and in New Orleans, and the average difference 
in prices will be the differential in living costs between the two 
cities. The difference between the prices of the identical com- 
modities between the two places would be very slight indeed. 
But if determined it would only mean the difference in prices 
and not the difference in the cost of living because of differences 
in habits of living. For instance, the dietaries in New Orleans 
are quite different from those in Philadelphia. The same 
articles of food would cost on the average about the same in 
the two places; but a dietary yielding just as many calories in 
New Orleans as a different dietary would yield in Philadelphia 
apparently will cost considerably less. Similarly so simple a 
differential to measure as rents may be nevertheless difficult to 
determine, the type and size of house in New Orleans being 
quite different from that in Philadelphia. There are climatic 
differences which affect standards in consumption of fuel. Also 
common brands of clothing between the two places are very 
few. So it is very difficult to estimate differences in cost of liv- 
ing between two places without making full budgetary studies. 
As the difference in cost of living between any two places is 
in most cases small, the error in rough approximations is too 
great. Probably the best way to handle this problem is to have 
very careful budgetary studies made in representative localities 
in representative districts, as for instance in small towns, large 
towns and large cities in the various geographical areas, and 
to use the differential thus carefully determined as representa- 
tive of other differentials. This the U.S. Bureau of Labor Sta- 
tistics is engaged in doing at the present time. 

This point is extremely important in forming any really na- 
tional policy on wages. At the present time there are con- 
siderable differences in levels of wages in different parts of the 
country. Some observers justify these local or territorial 
differences by saying that the cost of living is quite different 
in these areas. Others on the other hand reply that the dif- 
ferences in the cost of living in the various areas are different 
because wages determine the cost of living and that a uniformity 
in wages would bring a uniformity in living costs. They say 
that the identical standard of living prices in the various terri- 
torial districts would be very nearly the same in cost in all 
localities. Obviously such a problem as this should be solved 
before a satisfactory national policy in regard to wages can 



68 SELECTED ARTICLES 

be declared. The Railroad Wage Commission and the Ship- 
building Labor Adjustment Commission, both handling wages 
on a national scale, have been confronted with this problem. 
In general their findings have been that the differences in the 
cost of living in various parts of the country are not so great 
as. are popularly supposed. 

In conclusion, then, it must be recognized that there are 
various determinants of wages, supply and demand, productivity 
and the standards of living; and these are variously interrelated. 
In a period of laissez-faire conditions, supply and demand oper- 
ate particularly strongly. But with the development of social 
control and the growth of social justice, the standard of living 
plays a large part in the determination of wages. This has been 
true particularly during the war because of the increase in 
prices and the necessity of a high degree of social regulation 
and control. During the period of demobilization and recon- 
struction, the standard of living should be equally as important 
in national consideration. For the gains of democracy, whether 
it be political or economic in the last analysis, certainly come 
down to one important base, the standard of living. The stand- 
ard of living must also be very seriously considered in formu- 
lating any national policy in regard to wages. The importance 
of the standard of living in the adjustment of wages then has 
been the reason for setting forth in this paper the definition of 
important concepts involved, something of the technique of 
measurement recently evolved and also a few of the more im- 
portant facts in regard to the extent in the rise of the cost of 
living and the present levels in the standard of living. 



THE INDEX NUMBER WAGE 1 

A Scientific Method for Adjusting Wages to the Cost of Living 

There are but few who understand that the science of politi- 
cal economy is comparatively young. Adam Smith's classical 
work upon the "Wealth of Nations'' was not published until 
1776, and prior to that time commercial enterprise generally 
went hand in hand with military aggression. Trade, or at least 
international trade, was predatory in its character, and the hope 

*By Theodore H. Price. Outlook. 121:742-3. August 30, 1919. 



PROBLEMS OF LABOR 69 

of finding peoples and countries that they might exploit and 
pillage was the chief inspiration of the explorers of the fifteenth, 
sixteenth, and seventeenth centuries. As long as commercial 
supremacy was a question of physical prowess, a knowledge of 
economic law was not essential in its attainment. 

It is therefore chronologically appropriate that the birth of 
economic science as we know it to-day should have been con- 
temporaneous with the French Revolution and the establish- 
ment of the American Republic, which were the result of the 
first really successful efforts that society had made to substitute 
the law of right for that of might. 

In the days of Adam Smith and for fifty years thereafter 
there was, however, but little international trade and practically 
none of the international community of financial interest that 
exists to-day. Great Britain's imports and exports in 1750 were 
valued at an aggregate of only £17,400,000. 

In 1915 they were worth £1,403,555,065, or eighty times the 
total of 1750, while the population in the interval had only mul- 
tiplied itself by seven, having been 6,517,035 in 1750, as against 
46,089,249 in 1 914. 

In the year 1800 and previously loan and deposit banking as 
it exists to-day was practically unknown. Most transactions 
were settled by the payment of gold or silver, and the supply of 
these metals must have been altogether inadequate, for, accord- 
ing to Soetbeer, their production during the forty years end- 
ing with 1799 averaged less than $45,000,000 annually, as against 
a present average of about $700,000,000 a year. 

It was not until labor-saving machinery had made produc- 
tion on a large scale possible, and steam provided a prompt and 
reliable means of transportation, that the development of mod- 
ern commerce commenced, and it was only when distance and 
time were annihilated by cable and telegraph that prices through- 
out the world began to fluctuate in unison and the law of supply 
and demand became so "delocalized" in its operation that gen- 
eralizations in regard to it were safe. 

All of which is by way of explaining the meagerness of the 
historical data that are at the disposal of the economist to-day. 

There are military and political histories of the nineteenth 
century without number, but an adequate history of the world's 
trade and finance in that period remains to be written, although 
it is the first century in which there was really any trade and 



70 SELECTED ARTICLES 

finance that could properly be described as international or 
world-embracing. 

Even now the records that are essential to a thorough knowl- 
edge of the subject are obscure or unavailable in many coun- 
tries, and the differences of language, currencies, weights, and 
measures are so numerous that accurate and intelligent com- 
parisons of prices are exceedingly difficult. 

It is therefore manifest that a precise determination of what 
is called the decreased purchasing power of money is impossible, 
but in what has come to be known as the "index number" we 
have the first scientific effort that has been made toward this 
end, and as such it is worthy of the careful study of those who 
look forward to the time when wages and prices shall be intelli- 
gently regulated in conformity with economic law and the costs 
and wastes of strikes and deceptive bargaining shall be avoided. 

The index number is the sum or average of the prices of the 
commodities that are essential to civilized existence. To be of 
indicial value the prices of which it is representative must be 
marshaled on successive dates, and a comparison between the 
total or average of the figures thus obtained will show the aver- 
age percentages of advance or decline in the prices of the com- 
modities included during the period under consideration. 

Inasmuch, however, as the wants of civilized man include a 
great many different things which are consumed in different 
proportions, it will readily be seen that an index number to be 
accurately reflective of the cost of living must be not only an 
average of the prices of a large number of articles, but a 
"weighted" average, in the computation of which the price of 
each article or group of articles is multiplied by a factor which 
about equals the ratio that the consumption of the article or 
group bears to the total normal consumption. 

Thus the index number compiled by R. G. Dun & Co. and 
known as "Dun's Number" is used in this discussion because it 
includes the prices of some three hundred products, so arranged 
that foods count for about fifty per cent of the total, textiles 
for eighteen per cent, minerals for sixteen per cent, and other 
commodities for sixteen per cent. While this division is of 
course arbitrary, it is probably an approximation to the fact, 
and the number of commodities included is certainly larger than 
the number used in the composition of any other index number 
of which I have knowledge. Among the other authorities pub- 



PROBLEMS OF LABOR 71 

lishing index numbers are "Bradstreet's," Babson, and the 
United States Bureau of Labor Statistics in the United States, 
the "Statist" and the "Economist" in England, and the Depart- 
ment of Labor in Canada. Index numbers are also officially 
or unofficially compiled in Australia, Austria-Hungary, Belgium, 
Denmark, France, Germany, India, Italy, Japan, Netherlands, 
New Zealand, Norway, Russia, and Spain. 

"The Making and Using of Index Numbers" is the title of 
an exceedingly interesting pamphlet of 325 pages prepared by 
Professor Wesley C. Mitchell and published as Bulletin No. 173 
of the Bureau of Labor Statistics at Washington. 

It is to be obtained upon application to the Department of 
Labor, and I recommend it heartily to those who may desire 
to inform themselves in regard to the history and technique of 
a statistical formulary that is likely to have great weight and be 
of great practical assistance in solving many of the economic 
problems of the future. 

Already the "Index Number Wage" has been adopted in 
several American industrial establishments. Those that I hap- 
pen to have heard definitely of are the Oneida Community, of 
Oneida, New York; the Kelley-Howe-Thomson Company 
(hardware), of Duluth, Minnesota; the George Worthington 
Company (hardware), of Cleveland, Ohio; the Printz Bieder- 
man Company (clothing), also of Cleveland; the Index Visible 
(Inc.), of New Haven, Connecticut; the Mishawaka Woolen 
Manufacturing Company, of Mishawaka, Indiana; and the 
LInion Bleaching and Finishing Company of Greenville, South 
Carolina. The details of the plans followed in each case differ 
slightly, but generally they take as a base the wages paid on a 
certain date upon which it is assumed that earnings and the 
cost of living bore an equitable relation to each other. On 
subsequent pay days the employees have received two envelopes, 
one containing the "base wage," and another, sometimes called 
the "H. C. L. Envelope," which contains a percentage of the 
base wage equal to the percentage of advance in commodity 
prices over those current at the time when the base wage was 
established, as shown by the most recently published index 
number. 

A variant of this method has been applied in the case of 
the wages paid to the employees of the county of Cuyahoga, 
Ohio, in which county Cleveland is situated. 



72 SELECTED ARTICLES 

I believe that the general adoption of an Index Number 
Wage will provide a permanent solution for many of the prob- 
lems that must confront both the employer and employee as the 
purchasing power of money changes. Such a wage, automatically 
rising and falling as the cost of living fluctuates, would to a 
great extent obviate strikes, lessen discontent, and reconcile the 
wage-earner to lower wages when prices decline, because he 
would realize that when they went up again his pay would be 
increased without any demand on his part. The Index Number 
Wage would also lead the employee to become a student of eco- 
nomics and practice an intelligence in buying that would make 
extortion or profiteering on the part of the retail merchants with 
whom he dealt extremely difficult. The head of one of the es- 
tablishments that has adopted the Index Number Wage tells us 
that his employees admit that their money "goes much further" 
than it used to, because their "H. C. L. Envelopes" contain a 
slip giving the wholesale prices of most things that they need, 
and by comparing it with the retail prices demanded of them 
they can see whether the}* are being overcharged or not. 

But it is in our greatest industry, namely, transportation, that 
the adoption of an Index Number W r age seems to promise the 
most desirable results. 

It would promote not only a feeling of contentment among 
the employees, because they would have a consciousness of 
equitable treatment, but it would also bring the public to a better 
understanding of the problem that the railway managers have 
had to face latterly and reconcile the patrons of the roads, be 
they travelers, shippers, or consumers, to the advance in rates 
recently established or any further advance that may be neces- 
sary. 

As we look back over the records since 1896, we are driven 
to the conclusion that railroading is the only business in the 
United States in which the charge for the service rendered or 
the article sold does not bear some relation to the cost of pro- 
duction. 

In the case of transportation, the cost of production is in 
the last analysis the cost of the labor employed, for whether this 
cost of labor is reflected directly in the wages paid, or indirectly 
in the cost of the materials (fuel, oil, steel, etc.) purchased, 
makes little or no difference. If coal costs more, it is because 
the miners are better paid. If steel rails are higher, the advance 



PROBLEMS OF LABOR 73 

reflects the higher wages paid for their fabrication. If oil has 
increased in price, the enhancement is due to the greater cost 
of the human energy required for its production; and so it is 
all along the line. The cost of providing transportation is 
almost entirely made up of the cost of labor. There may be 
some who will take exception to this statement and claim that 
since the interest paid on the capital invested or borrowed does 
not go into the wage-earner's pocket it is not accurate to assert 
that this element of cost fluctuates in relation to the cost of 
labor or the cost of living, which have latterly become terms 
that mean nearly the same thing. 

This might be true, were it not for the fact that all parts 
of a railway are constantly wearing out and have constantly 
to be renewed. The amount of the original investment and 
the rate of interest thereon may be static, but the material or 
labor used in necessary replacement as the rails or bridges first 
purchased wear out represents human energy that must be paid 
for at the market rates. It is therefore clear that, except as 
to the profits paid out in dividends or carried to surplus account 
(which aggregate hardly more than ten per cent of the entire 
gross revenue), the railway business is simply one of buying 
and selling human energy, either physical or mental. 

In the light of this statement it would be natural to expect 
that railway rates, railway wages, and the cost of living would 
fluctuate in unison, but this has not been the case. Since 1896, 
until Mr. McAdoo raised them last summer, freight and pas- 
senger rates have been practically unchanged and wages were 
advanced but little, while the cost of living has steadily in- 
creased. The existence of this anomaly is made clear by the 
chart and tabulated comparison on the preceding page. 

The lines which run irregularly across the chart follow the 
fluctuations recorded since 1896 in the cost of living and rail- 
way rates in the United States as shown by the tabulated 
figures. It is assumed that the average revenue received by the 
railways for hauling a ton of freight or a passenger one mile 
represents, as it does, the charge made for transportation, and 
that Dun's Index Number, which is used, reflects the changes 
in the cost of living recorded from year to year. 

Lack of space makes a more detailed description of the 
method used in the computation impossible, but the significance 
of the figures will perhaps be better understood if it is ex- 



74 SELECTED ARTICLES 

plained that they show that the necessaries of life which could 
have been bought at wholesale for $72.45 on July 1, 1897, would 
have cost $233.22 if bought on October 1, 1918. From July 1, 
1917, the index number figures are given month by month, as 
the advance immediately after the United States entered the 
war was almost unbelievably rapid, and the freight and pas- 
senger rate for both the first and last half of 1918 are closely 
estimated because the official averages have not yet been made 
up. A careful study of these exhibits will show that, even in- 
cluding the advances established last summer, freight and pas- 
senger rates are but twelve and twenty per cent higher, re- 
spectively, than they were in 1896, while the cost of living has 
risen over two hundred per cent. 

It is not surprising that under such conditions the railway 
employees were impelled to use every means at their command 
to secure an increase in their pay, and that the railway man- 
agers resisted their demands because the Interstate Commerce 
Commission would not permit an advance in rates. 

Discontent, strikes, reluctant concessions to the wage-earn- 
ers, impaired efficiency, and the near bankruptcy of the railways 
were the consequences, complete insolvency being averted only 
by the action of the Government in taking over the transporta- 
tion industry on January 1, 1918. 

When this was done, it immediately became clear that a sub- 
stantial advance in the wages of railway employees was neces- 
sary in order to retain their services and enable them to live. 
It was granted, and freight and passenger rates were afterward 
advanced by twenty-five and fifty per cent, respectively, in the 
hope that the increased revenue secured would offset the in- 
creased cost of labor. The advance in wages allowed, plus the 
advance in the cost of supplies, has, however, proved to be 
greater than the increase in revenue resulting from the advance 
of rates, and a deficit of approximately $200,000,000 for the 
first year of Government operation is the result. 

This deficit is plainly due to the previous maladjustment or 
lack of adjustment between costs and rates. 

If in 1896 it had been practicable to establish, and there had 
been established, an Index Number Wage and an Index number 
freight and passenger rate in the railway business, how much 
trouble and distress would have been avoided! 

Now that the railways are under a single management, is it 



PROBLEMS OF LABOR 75 

not practicable to do something of the kind? It should not be 
necessary to advance rates in the same proportion that wages 
were increased. Allowance should properly be made for the 
greater operating efficiency that is the result of scientific prog- 
ress and the reduction in overhead costs that is possible with an 
increased density of traffic, but the experience of the last twelve 
months shows that the public do not object to paying higher 
rates when there is good reasons for them ; and no clearer 
demonstrandum ad hominem of their reasonableness can be 
furnished than the evidence of increased cost of living and of 
labor that the index number supplies. 

Since the foregoing was written I notice that the Index 
Number Wage has been adopted in England in the case of at 
least one important concern, as witness the subjoined clipped 
from the New York "Journal of Commerce" of April 13, 1919: 

London, March 14. 
Announcement was made by Lord Harris, Chairman of the South 
African Gold Trust, Ltd., at its annual meeting, that an arrangement had 
been entered into with the clerical forces whereby the bonus paid the 
staff would be regulated by the cost of living, i. e., it would fluctuate with 
this cost as indicated by Sauerbeck's index number of commodity prices. 
The agreement provides that the bonus should be represented by the 
index figure at the date when the arrangement was made, and that 
salaries shall not fluctuate below a certain minimum recognized as the 
pre-war standard. 



METHODS OF COMPENSATION 

(a) Wage Methods and Bonuses 

WAGES, HOURS AND INDIVIDUAL 
OUTPUT * 

The Economic Law of Wages 

The question of compensation is inseparable from the general 
wage problem. Limitations of space preclude a discussion of 
the theory of wages and those interested in the problem are 
referred to standard theoretical works on the subject. Nor 
would the theory of wages as developed by economists be of 
much practical aid for the purposes for which this volume is 
published. 

The Marxian theory, which is held by the Socialists and is 
the ultimate logical elaboration of the classical theories of Smith 
and Ricardo, holds that wages are determined by the cost of 
maintaining a worker and his family at the standard of living 
prevailing in society at a given time. As the standard of life is, 
however, a very elastic quantity varying greatly among different 
groups of workers living in the same country and in the same 
period, the Marxian theory, whatever its theoretical merits, is 
of little practical value for our purposes. 

At the other extreme of economic thought is the "marginal 
utility" theory which is today the accepted theory in our schools 
and universities. According to this theory, the rate of wages 
is determined by the marginal or ultimate utility of productiv- 
ity of labor, that is to say, by the specific contribution which 
the last available laborer makes to the necessary product of 
society. 

The two theories really supplement one another, and mark 
the limits within which wages fluctuate in actual practice under 
the varying and interacting influences of supply and demand. 

1 By N. I. Stone, Labor Manager, Hickey-Freeman Companv, Roches- 
ter, N. Y. Annals of the American Academy. 85:120-4^. September, 

IQIQ. 



78 SELECTED ARTICLES 

Under the most unfavorable combination of these two factors 
wages cannot permanently remain below the prevailing cost of 
living of a workman's family without disaster to the workers 
as well as to the entire economic structure of society. On the 
other hand, wages cannot permanently rise above the value of 
the product contributed by labor, since no industrial enterprise, 
be it large or small, could survive in the struggle of competition, 
if it continued for any length of time to pay out more in wages 
than its labor force has contributed to the value of its products. 

Between these two extremes there is an endless gradation of 
rates of compensation determined by a variety of circumstances, 
among which the supply of and demand for labor, the prevail- 
ing cost of living, the productivity of labor and, last but not 
least, the strength of labor organizations exercised in collective 
bargaining, play the chief part. 

The process of "bargaining," in a broad sense is the most 
conspicuous factor in wage determination. The bargaining may 
take the outspoken form of a bargain driven between a single 
employer or an association of employers on the one hand and 
an individual workman or a workmen's union on the other; or 
it may be disguised under the form of a workman hunting a 
job and accepting what he is offered when the supply of labor 
exceeds the demand or, vice versa, of employers scouring the 
market for labor and paying what the workman demands when 
the demand for labor outruns the supply, as was recently the 
case at the height of war activities. In either case the bargain- 
ing process goes on, with labor handled as any other commodity, 
the buyer (the employer) trying to get his commodity as cheaply 
as he can, and the seller (the workman) striving to obtain the 
highest possible price. 

Were the analogy between labor and any other commodity 
complete, there would be nothing further to be said on the sub- 
ject. The similarity between labor and other commodities, how- 
ever, ends at this point. For, while the seller of an ordinary 
commodity parts with it as soon as he has delivered it to the 
buyer, the seller of the commodity known as "labor" is insepar- 
able from it. It is from this circumstance that all the perplexi- 
ties of the modern labor problem spring. And it is to the fail- 
ure on the part of employers to take this fact into account that 
most of the "labor troubles" can be traced. 



PROBLEMS OF LABOR 79 

Wages and Labor Cost 

Even in buying ordinary commodities we have learned that 
the lowest priced article is not necessarily the cheapest. An 
experienced buyer will consider not only the price he is asked 
to pay, but also the quality of the article he is getting in the 
bargain. Unless the article is a staple commodity absolutely 
standardized under market requirements, such as wheat or pig 
iron, the lowest price will not necessarily mark the most eco- 
nomical purchase. A suit of clothes made of shoddy, though 
looking exactly the same as one made of virgin wool, will not 
last as long and, though selling at a much lower price, will 
prove the more expensive of the two, when the price paid for 
each suit is divided by the number of months of wear each gave. 

This elementary truth is recognized by every experienced 
employer and foreman in comparing the usefulness of different 
employes; the worker who possesses superior skill or, who with 
the same skill works with greater speed, is always preferred 
and is readily offered a higher wage than the prevailing rate for 
workers of average speed or skill. But that the same labor 
force can be made cheaper by raising its wages or shortening its 
hours of labor, or both, is still an unknown fact among the 
great body of employers, superintendents and foremen, and, 
when stated, is regarded with distrust and with doubt in the 
practical wisdom of the man who advances this view. Yet, it 
has now been accepted as an elementary principle of the science 
of management among industrial engineers. 

Stated baldly, the proposition that high-priced labor is 
cheaper than low-priced labor, and that shorter hours are more 
productive than long ones sounds like a paradox. If that be 
true, then the age-long struggle between capital and labor for 
higher wages and shorter hours has been the most tragic mis- 
understanding in history in which the employers have wasted 
millions of dollars and countless lives fighting against their own 
interests; while labor, trying to improve its own lot, has un- 
wittingly fought for capital's best interests, trying to save it 
from its own folly. 

The misunderstanding is easily explained. All things re- 
maining equal, the higher the rate of wages, the greater the 
labor cost of the manufactured product. This is perfectly log- 
ical, but rests on the false premise that all things remain the 



8o SELECTED ARTICLES 

same when a change in wages occurs. As a matter of fact, they 
seldom, if ever, remain unchanged. The mere increase in wages 
will not of itself produce the miracle, unless labor is so under- 
paid as to cause the workers to be poorly nourished, inadequately 
clothed, and housed under unsanitary conditions. In that case 
a substantial increase in wages which would enable them to eat 
nourishing food, wear clothing that will protect them against 
surroundings will of itself improve the condition of the indi- 
vidual worker as a producing machine so as to increase greatly 
his productivity. It is but a common sense application of the 
rule which prompts a sensible man to feed his horse oats, in- 
stead of keeping it on an exclusive diet of hay and to provide 
well sheltered, clean and sanitary barns for his cattle, instead of 
neglecting them as a stingy, short-sighted farmer is apt to do. It 
was because of facts like these, that the Ford plan of providing 
a minimum rate of $5.00 a day, practically doubling the earnings 
of the bulk of his employes, proved such a huge success, and 
instead of increasing his cost of production, produced the oppo- 
site effect. 

With the war over and international trade about to resume 
its interrupted course, the cry for protection of American labor 
against the pauper labor of the old world again resounds 
through the country and the majority party in Congress bases 
its program for an immediate revision of the tariff almost solely 
on that ground. It is therefore felt that the universality of the 
law that high wages and short hours spell lower costs rather 
than the opposite, requires further demonstration. 

The writer's attention was drawn to this aspect of the prob- 
lem with particular force, while it was his good fortune to come 
into intimate contact with some of our industries when in charge 
of investigating into the cost of production for the United 
States Tariff Board. Some of the most important fa£ts ascer- 
tained in those investigations will therefore be reproduced from 
an earlier statement by the writer : 1 

The first fact established by the Tariff Board was there is no such 
thing as a cost of production in a given industry not only in one country, 
but even in the same city. 

As confirmed by the later investigations of the New York State Fac- 
tory Investigating Commission, and the Massachusetts Commission in other 
industries, and of the Wage Scale Board of the Dress and Waist In- 
dustry in New York City, the tariff board found that establishments exist- 
ing side by side and competing in the same market are paying wages 
differing as much as 50 per cent for substantially the same grade of labor. 

1 N. I. Stone. Is the Minimum Wage a Menace to Industry? Survey 
— February 6, 1915. 



PROBLEMS OF LABOR 81 

It also found that neither the labor cost nor the total cost of production 
varies in a direct ratio with wages. 

Thus in paper and pulp manufacture it was found that the labor cost 
of making a ton of news-print paper in the United States varied from 
$2.19 to $7.26 per ton.- The most remarkable fact about it was that 
the mills paying the lowest wages and having a twelve-hour day, had a 
higher labor cost per ton of paper than those paying the highest rates of 
wages and having an eight-hour day. 

The solution of this puzzle lies in the chapter of the report dealing 
with the efficiency of equipment in paper mills. Mills were found to 
vary greatly in this respect. Some had machinery thirty years old; others 
boasted of machines with latest improvements. The older machines had a 
capacity of 17 tons in 24 hours, whereas the newer machines could pro- 
duce 50 tons. The result, according to the tariff board report (page 52), 
was that the machine cost of labor per ton of paper was $1.84 on the old 
and only 82 cents on the new, the same rate of wages being paid to the 
machine tenders in each case. 

But important as the mechanical equipment is in determining the effi- 
ciency of labor, the human equation responds even more readily to varia- 
tions in wages and hours. 

When the agitation for the removal of the import duty on news-print 
paper resulted in an inquiry by a special committee in Congress, a rep- 
resentative of the largest paper mill company in the country pointed to 
the fact that they had recently reduced the hours of labor from twelve to 
eight, without reducing the weekly rate of wages, incurring a correspond- 
ing increase in their labor cost. The figures secured by the tariff board 
from the books of several mills (including those to which reference was 
made before the committee of Congress) showed a diminution in the labor 
cost per ton of paper from $4.35 to $3.73 in 1909, under the eight-hour 
system. In other words, an increase in the hourly rate of wages to the 
extent of 50 per cent not only failed to result in a corresponding in- 
crease in the cost of labor per ton of paper, but was accompanied by an 
actual lowering in cost. Though the figure of $4-35 in 1908 happened 
to be the highest in ten years, the tariff board report (page 79) showed 
that there was not a single year in that decade under the twelve-hour 
system w T hich showed as low a cost as in 1909, the first year under the 
eight-hour system. On the other hand, when it is remembered that during 
a large part of the year of 1906 the mills were idle owing to the strike 
for snorter hours, and that costs are usually above normal when a plant 
is started up after a period of idleness, there is every reason to believe 
that the labor cost was still further reduced after 1909. 

Yet it cannot be said that there was a radical change in the equip- 
ment of the mills to which these figures relate, immediately following the 
introduction of the eight-hour shift. The change was due largely to the 
increase in the personal efficiency of the workers under the shorter day. 
The duties of a machine tender in a paper mill consist chiefly in watch- 
ing the thin liquid sheet of paper as it first appears on the large cylinder 
of the machine. A slight twist at the outset will result in reams of 
paper being torn on the cylinder, and a mad rush of all the tenders in 
an endeavor to set things right: and it will frequently require a com- 
plete stoppage of the machine, all of which greatly increases the cost of 
production. The fatigue caused by - twelve hours of such nervous and 
physical strain, had resulted in a much greater proportion of damaged 
paper and interruption of work than was the case after the adoption 
of the eight-hour day. 

With the hours of labor cut down from twelve to eight, the machine 
tender was relieved from duty during the last four hours which were 
the most trying to the nerves and muscles of a worker, when his alert- 
ness and general efficiency were at their lowest ebb. The reduction of 
hours not only enabled him to leave the mill less fatigued than formerly, 
but with the resting period increased by four hours a day, the recuperation 
was more thorough; so that his. alertness of mind and body was greater 
upon his return to work than under the old system it used to be even 
during the first eight hours. With his mind and body more alert, he 
was able to detect in time imperfections which formerly escaped his at- 
tention. 

2 U. S. Tariff Board Report on Pulp and News-Print Paper Industry, 
1911, p. 39. 



82 SELECTED ARTICLES 

This resulted in so great an increase in the relative time the machines 
were in actual operation (free from breakdowns and stoppages), accomp- 
anied by a reduction in the quantity of damaged paper on which, in the 
preceding stages of production, labor had been wasted, that the labor 
cost of production of paper declined, in spite of the increase in the hourly 
rate of wages, by as much as 50 per cent. 

Even more striking proved many of the facts disclosed by the investi- 
gation of the cotton industry. In spite of higher wages prevailing in the 
United States, as compared with England, and the longer start which the 
English cotton industry has had over the American, it was found that 
many varieties of cotton goods, including some of the finest women's 
dress goods, were sold at lower prices in the United States than in Eng- 
land, and exported to Canada in competition with British goods despite 
the preferential tariff in favor of England which places imports from 
the United States at a disadvantage. 

That American cotton goods compete with English in China and South 
America, was known before the tariff board made its investigation. But 
fear was expressed of the coming menace of Japanese competition with 
its fifteen-cents-a-day weavers. The tariff board, therefore, extended its 
investigation to Japan, and figures compared with similar data for cor- 
responding mills in the United States led to the startling revelation that, 
wih the superior American machinery and superior personal efficiency of 
American labor, the American weaver receiving $1.60 a day was in cer- 
tain cases cheaper than the Japanese weaver at 18 Yz cents a day. 8 

A study by the tariff board of labor efficiency in the various processes 
of wool manufacture showed that almost invariably the mills paying 
higher rates of wages per hour, produced goods at a lower cost than 
their competitors paying lower wages. 

Thus, in wool scouring the lowest average wage paid to machine op- 
eratives in the thirty mills examined, was found to be 12.16 cents per 
hour, and the highest 17.79. 4 Yet the low wage mill showed a labor cost 
of twenty-one cents per hundred pounds of wool, and the high wage 
mill had a cost of only fiften cents. One-half of the difference was ac- 
counted for by the fact that the low wage mill paid nine cents per hun- 
dred pounds for supervisory labor, such as foremen, whereas the high 
wage mill paid only six cents, showing it had more efficient management. 

In the carding _ department of seventeen worsted mills, the mill paying 
its machine operatives an average of 13.18 cents per hour had a machine 
labor cost of four cents per hundred pounds; while the mill paying its 
machine operatives only 11.86 cents per hour had a cost of twenty-five 
cents per hundred pounds. This was due largely to the fact that the 
lower cost, high wage mill had machinery enabling every operator to turn 
out more than 326 pounds per hour, while the high cost, low wage mill 
was turning out less than 48 pounds per hour. 

The m same tendency was observed in the carding departments of 
twenty-six woolen mills. The mill with the highest machine output per 
man per hour, namely, 57.7 pounds, had a machinery labor cost of twenty- 
three cents per hundred pounds, while the mill with a machine output of 
only six pounds per operative per hour had a cost of $1.64 per hundred 
pounds. Yet this mill, with a cost seven times higher than the other, 
paid its operatives only 9.86 cents per hour, against 13.09 cents paid by 
its more successful competitor. 

These examples could be repeated for other departments of woolen 
and worsted mills, but will suffice to illustrate the point that higher wages 
do not necessarily mean higher costs. They^ show that mill efficiency de- 
pends more on a liberal use of the most improved machinery than on 
low wages. Thoughtful planning in arranging the machinery to save 
unnecessary steps to the employes, careful buying of raw materials, the 
skillful organization and utilization of the labor force in the mill, syste- 
matic watching of a thousand details, each affecting the cost of manu- 
facture, will reduce running expenses to an astonishing degree. 

It may be said that there need not be any relation between the pay 
of the help and the efficiency of the management at the head of the mill. 
There seems to be no necessary connection between the two, yet economic 
literature is full of references to the fact that successful strikes resulting 

3 U. S. Tariff Board Report on Cotton Industry, p. 12. Weavers wage 
bill, table 162, p. 526. 

4 Tariff Board Report on Wool and Manufacturers of Wool, p, 1022. 



PROBLEMS OF LABOR 83 

in an appreciable rise of wages or reduction of hours have been followed 
by the introduction of new machinery or other labor saving devices to 
offset the heightened cost. All things remaining equal, an increase of 
wages must necessarily lead to an increase in the cost of production. 
The threatening diminution of profits, acts as a powerful stimulus to the 
owner or manager of a plant who is anxious to make possible savings, 
where he was satisfied before to plod along in the established rut. 

Relation of Compensation to Output 
Week Work 

That high wages are economical when accompanied by a 
corresponding output, is easily understood. "But," says the 
average employer, "the two do not necessarily go together. The 
tendency of the average worker, especially, the union worker, is 
to lie down on his job. When paid by the week, he tries to keep 
down his output partly from inertia and a natural tendency to 
'take things easy/ and partly from a feeling that the less he 
will produce, the more work there will be to go around among 
his fellow-workers. And this, in turn, he feels, will keep down 
competition for jobs among workmen and help keep up wages." 

Unfortunately, this charge is justified to a large extent. It is 
the way human nature works under certain conditions. Know- 
ing that he will be unceremoniously thrown out on the street 
when not needed, and having no desire to subject his family to 
the hazards of hardships or starvation, which is the lot of the 
unemployed man, the workman has no more regard for the 
interests of the employer than the latter reveals for him. Not 
until industry or society provides adequate safeguards for the 
interests of the worker who suddenly finds himself displaced 
through no fault of his own, can he be expected to change his 
attitude. 

Manufacturers, industrial engineers, foremen and all those 
who employ labor in industry, prefer, therefore, to base com- 
pensation on output, except in industries where the work of the 
employe is so controlled through the operation of his machine 
or the organization of the factory or mill that he cannot easily 
•educe output. 

Piece Work 

Advantages of Piece Work. — The simplest way of basing 
compensation on output is through piece work. The compensa- 
tion of the worker is strictly proportional to his exertions. The 
more he produces, the greater the contents of his pay envelope. 
With the piece rate once determined, the system seems to work 



84 SELECTED ARTICLES 

fairly to both sides. The interests of both employer and em- 
ploye seem to be identical, since the more the worker earns, 
the greater the production and, therefore, the lower the over- 
head expense of the plant per unit of product. 

Disadvantages of Piece Work. — Unfortunately, the same can- 
not be said of the rate itself. There is an obvious conflict of 
interests in determining the rate, the old game of the seller (the 
worker) trying to get the highest possible price and the buyer 
(the employer) seeking to buy cheap, reasserting itself in this 
case. If this were the only drawback of the piece rate system, 
it would be eliminated, at least, upon the determination of the 
rate. Unfortunately, industrial practice has intensified the evil 
a thousand fold and has caused piece workers to restrict out- 
put with no less determination than that shown by time work- 
ers. This practice consists of cutting down piece rates when 
the workers earn "too much" money. 

i. Rate Cutting. — The late Frederick Taylor addressing the 
Efficiency Society of New York shortly before his death gave a 
striking recital of the reaction of the worker under this practice. 
He told of his early experience as a mechanic at the Midvale 
Steel Company plant and how, when he attempted to do an 
honest day's work he was warned by his fellow-workers to "go 
slow." The admonition was so emphatic that he soon found it 
best for his health to fall in line with the rest of the crowd. A 
few years later he was promoted to a foremanship. 

On assuming his new duties he called together all his fellow- 
workers and pointed out to them that having come up from the 
ranks he knew all the tricks of the "laying down" game and that, 
therefore, he expected them to turn a new leaf and do the best 
they could. In turn he assured them that they need have no 
fear of their piece rates being cut no matter how much their 
earnings might go up as a result of their increased efforts. The 
workers took him at- his word and went to work with a will. 
Soon the new foreman was the talk of the plant, for he was 
breaking all records of production. It was not very long before 
one of the directors of the company visited the plant and heard 
of the remarkable performance of the new foreman. Being of 
a curious mind, he looked up the shop personally and inquired 
for the pay roll. 

Like the good business man that he was, he was shocked by 
the inordinately high wages of the employes in Taylor's shop 
exceeding by several dollars the prevailing rate in the industry. 



PROBLEMS OF LABOR 85 

He ordered the rates cut in spite of all the pleadings of the 
superintendent and the foreman who pointed out the destruction 
of morale among the working force which this act would cause. 
Needless to say that the effect was to destroy all the confidence 
in the integrity of the employer which Mr. Taylor had built up 
among his men. His despair knew no bounds. Most men in 
his place would have given up the struggle, but Taylor was no 
ordinary man. The shock he experienced caused him to do 
some hard thinking and from this experience was born his 
Principles of Scientific Management. 

Mr. Taylor's experience was not exceptional. Anyone with 
the least industrial experience can cite similar instances from 
plants under his own observation. This virtually uniform prac- 
tice has embittered the workman and has undermined his con- 
fidence in the employer to an extent that no amount of assur- 
ance of a change of policy seems able to restore. 

Much of the rate cutting is due to cupidity or short sighted- 
ness on the part of employers who do not realize that for every 
dollar in wages which they thus save they lose infinitely more 
in lost efficiency caused by the curtailment of output by workers 
to which they are forced to resort in self-defense. 

But even with the best of intentions on the part of employing 
management piece-rate cutting is frequently unavoidable. In a 
plant having much sub-division of labor, it is impossible to allow 
a rate to remain uncut where it yields a particular section of 
workers earnings so high as to be out of all proportion to 
those of workers in other sections. If the prevailing earnings 
of skilled workers of that craft are, say, $5 per day, and a mis- 
calculated piece rate yields workers on a particular operation 
$10 per day, all the other employes will demand an increase in 
rates to bring their earnings up to the level of the lucky section. 
It is a psychological law. There are no absolute standards of 
earnings which will keep a worker satisfied. His satisfaction 
is largely based upon a sense of relative justice measured by 
comparison with prevailing earnings among groups of workers 
of similar skill. 

2. Loss of Earnings Through Inefficiency of Management.— 
Another strong objection to piece work raised by workmen is 
based on the loss of earnings which they incur through ineffi- 
ciency of management or other losses beyond their control. 
Only highly efficient plants — and their number is as yet small — 
know how to maintain an even flow of work throughout the 



86 SELECTED ARTICLES 

plant. The balance of work between the different departments 
of the plant is rarely maintained on an even keel for any length 
of time. As a result, workers in one department may be idle 
for hours, or considerable parts of the day, and sometimes even 
for days, while other departments have more work than they 
can handle; Poor control of the stock room results in the lack 
of one or more items of material being discovered at the last 
moment, when it is too late to prevent interruption of work. 
All these breaks in production fall with their full weight upon 
the worker, depriving him of earnings through no fault of his 
own, while his time is at the call and disposal of his employer. 

3. Speeding. — A third objection to piece work raised by 
workmen, particularly by organized labor, is the excessive speed- 
ing which the system encourages to the great detriment of the 
workers' health, frequently causing physical breakdown in the 
prime of life. 

4. Jealousy and Favoritism. — The desire to earn as much as 
possible causes a good deal of racing among the workmen pro- 
voking jealousies among them which foremen know how to 
utilize to prevent solidarity among the workers, by making 
favorites of some and discriminating against others. Union men 
are often given less desirable work than those who do not be- 
long to the union; frequently they are made to wait longer for 
their work in the intervals between one job and another. 

5. Sacrifice of Quality. — An objection to piece work which 
comes from employers is the tendency on the part of workers 
to sacrifice quality for quantity. Insistence on the part of the 
management on standards of quality leads to friction with the 
help. 

Such are the objections to piece work which have caused the 
industrial engineer to seek other means of compensation for 
labor. With all its drawbacks, however, the piece-rate system 
has the great advantage over the straight time-work in that it 
gives the workman a direct interest in his output, since his com- 
pensation rises automatically in a direct ratio to his effort and 
skill. From the point of view of the employer the piece-work 
system offers the great advantage of making wages strictly de- 
pendent upon output and automatically stopping wage leaks 
which are so common under the straight time-work system. Any 
substitute for piece work must, therefore, retain its advantages 
while eliminating its disadvantages. This ideal is believed by 
leading industrial engineers to be attained in 



PROBLEMS OF LABOR 87 

The Time and Bonus System 

The essential feature of this system of compensation for 
labor is the return to the original plan of paying the workman 
a wage on a time basis. This is based on the recognition of the 
fact that the workman is entitled to a certain minimum com- 
pensation for his time and labor power which he places at the 
disposal of his employer. At the same time his interest in his 
output is stimulated by an additional compensation, known as 
bonus or premium, which is based upon output. 

There are several systems of bonus compensation. The best 
known plans are all based on careful time studies as a prelimi- 
nary to fixing any rate of compensation. All of these systems 
have in common : ( 1 ) a straight hourly rate for each operation 
based upon the skill it requires; (2) a definite time allowance 
for every operation; (3) an additional compensation, known 
as "bonus" for doing the work in less time than the allowance 
calls for. 

Advantages of the Time and Bonus System. — There are 
definite advantages and distinct merits attached to the time and 
bonus system of compensation. (1) First and foremost from 
the point of view of justice to the worker is the definite mini- 
mum hourly compensation independent of his output. The 
worker is entitled to a living wage, if he is at all fit to be em- 
ployed. Straight piece work does not assure him such a mini- 
mum wage. Straight time work gives him a definite wage, but 
deprives him of any additional compensation in proportion to 
increased effort, skill or speed. It thereby destroys the incentive 
to conscientious endeavor, thus hurting the interests of the 
employer and employe alike. (2) This incentive is present 
under the bonus system, although the bonus earned is usually 
not proportionate to the increased output, as is the case under 
piece work, as will be shown below. (3) As already stated, the 
definite time allowance for each job is based upon careful time 
study. While there has been a good deal of well merited criti- 
cism of the methods employed in time studies, 1 the conscious 
aim of leading industrial engineers like Taylor, Emerson, Gantt, 
Barth, et al, has been to determine, by careful and conscientious 
study of the motions of several workers on a given operation, 

1 See Robert F. Hoxie, Scientific Management & Labor, Appleton Co., 
191S. 



88 SELECTED ARTICLES 

"the time it ought to take to do the work without undue effort 
when every unnecessary waste is eliminated." 2 

In this respect the time and bonus plan is superior to the old 
time piece rate system. The predetermined time allowance 
based upon the elimination of "every unnecessary waste" reduces 
to a minimum the chance of fixing the rates out of all proportion 
with existing standards of wages, with the unpleasant necessity 
of cutting the rates, a practice so disastrous to the worker and 
employer alike. 

On the other hand, the time study aims to determine a fair 
time allowance for every job "without undue effort." Speeding 
is frowned upon by the enlightened engineer who recognizes 
that anything that injures the health of the worker cannot be 
of permanent benefit to the industry. Scientific time studies have 
established the fact that every person and every job have their 
own time-rhythm which determines the normal rate at which 
the work can best be done. To illustrate : the normal gait for 
walking for the average person is, let us say, three miles per 
hour ; for a child it may be only one mile an hour. A normal 
man walking at the rate of a child would feel more tired at the 
end of an hour after walking one mile, than he would, if he 
walked three miles at his normal pace. On the other hand, he 
would not only be tired but exhausted, if, through speeding, he 
managed to walk five or six miles in one hour. Scientific time 
study aims at establishing the normal rate of speed, avoiding 
"undue effort" on the one hand, and "every unnecessary waste" 
of time or effort on the other. 

Having established the 'standard time for an operation 
through time study, there is no reason why a proper piece rate 
cannot be established just as accurately as a bonus rate, which 
would prevent the necessity of cutting the rate later. At the 
plant of Joseph & Feiss of Cleveland, where Scientific Manage- 
ment is in practice, practically all work is done at piece rates 
based on time studies and the system has been in successful 
operation for nearly a decade. The claim of this piece rate 
system to superiority is based on the fact that the rates being 
determined through time studies, there is no occasion for cut- 
ting them. But even this safeguard does not relieve it of the 
charge that, in common with all piece rate systems, it encourages 
speeding. This is overcome in part b}' deductions from pay 
for each defect discovered in the work of an employe and an 

2 Harrington Emerson, A Comparative Study of Wage and Bonus Plans. 
New York, 19 17. 



PROBLEMS OF LABOR S9 

equal reward for every defect discovered by the employe in 
another person's work. Not all bonus plans operate in the 
same manner in their effect on speeding. Some offer an in- 
centive to speeding far worse than straight piece work, while 
others are calculated to discourage it. We will consider here 
the five best known bonus systems. 

The Halsey Premium Plan was the first bonus system 
adopted. Under this plan the worker receives one-third, or one- 
half of the time saved. Thus, if the time set for a job is four 
hours and the rate is 50c per hour, and if the job takes actually 
only two hours, the worker would receive, under the one-half 
premium plan, 2x50c, or $1.00 for the time he worked plus y 2 of 
$1.00, or 50c for the time saved, making the total wage $1.50 
for two hours, or 75c per hour. Under the one-third plan he 
would receive $1.00 plus 33c, or $1.33, or 67c per hour. 

The Halsey Plan was adopted before scientific time studies 
were in use in industry. The premium it offers the worker is 
based upon standard time as determined by previous records in 
the shop. There is nothing inherent in the Halsey plan, how- 
ever, to prevent its adoption in combination with scientific time 
studies. Under this plan both employer and worker are 
benefited as the efficiency of the worker is increased, as shown 
by the figures in Table I. 

TABLE 1 

Illustration of Halsey's Premium Plan 

Hours Compensation Labor Cott 




-Q 



oc 



m H ffl h< <r* 

Rate per hr. 50c — Premium: One-half of Time-Wage Saved 

440 2.00 .0 2.00 .50 4 2.00 .50 

4 3 1 1.50 .25 1.75 .58V3 4 i-75 .43% 

422 1. 00 .50 1.50 .75 4 1.50 .3754 

4 13 -50 .75 1.25 1.25 4 1.25 .31H 

Rate per hr. 50c — Premium: One-third of Time-Wage Saved 

4 4 2.00 .0 2.00 .50 4 2.00 .50 

4 3 1 1.50 .16% 1.67 .56 4 1.67 .41% 

4 2 2 1.00 .33% 1-33 -67 4 i-33 -33*4 

413 -So .50 1. 00 1. 00 4 1. 00 .25 

As will be seen from the figures in Table I, as the worker 
gains in efficiency his earnings under the one-half bonus plan 
may rise, in the illustration chosen, from 50c per hour to $1.25 
per hour, while at the same time the labor cost to the employer 



go SELECTED ARTICLES 

goes down from 50c per unit of product to 3ij4c. Under the 
one-third bonus plan, the earnings of the worker will go up 
from 50c to $1.00 per hour, while the labor cost per unit of 
product will at the same time go down 50c to 25c. In other 
words, under the one-half plan the earnings of the worker per 
hour would go up 2^/2 times, while the labor cost to the em- 
ployer would go down but a little over one-third; while under 
the one-third plan the earnings of the worker would double and 
the labor cost to the employer would be reduced one-half. 

The Rowan Premium Plan provides for the payment of a 
regular hourly rate and, in addition, of a bonus equal to the per- 
centage of time saved, multiplied by the wage for the time 
actually taken to do the work. Under this plan the amount 
of which the bonus forms a percentage is based not on the 
time saved, but on the time taken, so that the less time the 
worker takes to do his job, the less is the bonus in proportion 
to his efforts. Thus, if the set time is four hours and the rate 
is 50c per hour, and the job is done in three hours, the worker 
has saved one hour, or 25 %. His regular wage would there- 
fore be equal to 1.50 and his bonus to 25% of that amount, or 
37V2C 

On the other hand, if the workman did the job in one hour, 
saving his employer 75% of the time set, his bonus, as will be 
seen from Table 2, illustrating the working of the plan, would 
be no greater, that is to say, the same 37^4 c. This plan is mani- 
festly unfair to the workman, yet even under this system of 
bonus payments it will be seen from the table below that it 
gives the workman a substantial increase of earnings per hour 
as the labor cost per unit of product is reduced. The employer, 
however, is benefited to a much larger extent than the employe. 

TABLE 2 

Illustration of Rowan's Premium Plan 

Rate per hr. 50c. Bonus: Percentage of time saved multiplied by wage 

for time in which the work was done. 





Hours 






Compensation 




Labor Cost 












Hi 

bo 


bo 




m 
to 

ii 


CO 

'2 


u. 
O 

.£3 


S.tJ 


•0 

u 

a 
a 


*c3 


< 


T3 

> 
in 


CO 

$1 


Ci 

B 

H 


& - 

CO 





H 


£ ° 
WW 


'S'S 


_ M 


c 

up 

O CJ 

•8* 
►J 


4 


4 





0% 


2.00 


,0 


2.00 


.50 


4 


2.00 


•50 


4 


3 


1 


25% 


1.50 


• 37 J A 


1.8754 


.62Y2 


4 


1.87% 


• 47 w 


4 


2 


2 


50% 


1. 00 


.50 


1.50 


•75 


4 


1.50 


.37 V2 


4 


1 


3 


75% 


•50 


37^ 


.8 7 y 2 


.8 7 y 2 


4 


.87H 


.22 



PROBLEMS OF LABOR 91 

The Gantt Task and Bonus System. — This is a modification 
of the Taylor differential piece-rate system. Under the Taylor 
plan, the task or number of units which a workman can produce 
in a given time is determined by careful time study. Two piece- 
rates are then set for the work: a low rate, if the worker fails 
to make his task in the prescribed time and a higher rate, if he 
makes his task in the standard time, or less. Under this system 
of payment, the worker is stimulated to exert himself to the 
utmost to earn the higher rate. The incentive to speeding is 
obvious. 

The Gantt plan converts the Taylor differential piece-rate 
system into a task and bonus system, that is to say, instead of 
having two piece-rates, there is a basic rate per hour which is 
all that the worker receives so long as he fails to meet the task; 
as soon, however, as the worker has made his task in standard 
time or less, he receives a bonus varying from 20 to 50 per 
cent, according to the nature of the work and the degree of in- 
ducement which is regarded necessary to insure the interest of 
the worker. Once the worker has achieved his task in a given 
time, the combined time and bonus rate remains fixed, so that 
from that point on the compensation becomes virtually a straight 
piece-rate, the same as under the Taylor system. 

In the illustration given in Table 3 it is assumed that the 
basic rate for the worker is 50c per hour, and that the bonus 
is 50% of the wages earned in standard time. Under this sys- 
tem of payment, if the standard time is four hours, and it takes 
the worker anything from 5 to 8 hours, he will receive a straight 
hourly rate of 50c per hour. The moment, however, he makes 
his task, that is to say, as soon as he does the required number 
of units in 4 hours, he receives in addition to $2.00 for 4 hours' 
work, a bonus of 50% of that amount, or $1.00, making the total 
payment equal $3.00. His earnings thus suddenly increase from 
50c to 75c per hour. The achievement of the task thus brings 
a high reward, but (as in the case of the Taylor system) if the 
workman has strained himself to the utmost and reduced the 
time, in which he makes the task, from 8 hours to, say, 4J4 only, 
he would get no reward whatever, still drawing his 50c per 
hour. In fact, he would be penalized for his extra effort, for 
instead of receiving $4.00 for the job as he did when it took him 
8 hours to do it, he would now get only $2.12 for the same 
amount of work, done with greater exertion. Viewed from this 
angle, Mr. Gantt's claim that "We have here all the advantages 
of day work combined with those of piece work, without the 



92 SELECTED ARTICLES 

TABLE 3 
Illustration of Gantt's Bonus Plan 



Hours 




Compensation 




Labor Cost 






1 

N^ 1 


bo 






bfl 

.5* 


35 









w o 

>* 


C8 








P 

V 


■8 


o'S 

up 


tand 
ctua 


a 


3 

G 
O 





2 o* 


6* 


!* 


2^ 


C/J < 


C/j 


H 


PQ 


H 


H 


& 


H 


J 


A-Rate: 


50c per hr 


— Bonus 


: (Minimum) 


20% of Wage for Standard Time 


4 8 


—4 


4.00 


.0 


4.00 


.50 


4 


4.00 


1. 00 


4 7 


— 3 


3-50 


.0 


3-50 


.50 


4 


3.50 


.87% 


4 6 


— 2 


3-oo 


.0 


3.00 


.50 


4 


3-oo 


- 75 , 


4 5 


— 1 


2.50 


.0 


2.50 


.50 


4 


2.50 


.6254 


4 4 




2.00 


.40 


2.40 


.60 


4 


2 40 


.60 


4 3 


+ i 


1.50 


.90 


2.40 


.80 


4 


2.40 


.60 


4 2 


+ 2 


1. 00 


1.40 


2.40 


1.20 


4 


2.40 


.60 


4 i 


+ 3 


• 50 


1.90 


2.40 


2.40 


4 


2.40 


.60 


B-Rate: 


50c per hr. 


— Bonus 


(Maximum) 


50% of Wage for Standard Time 


4 8 


— 4 


4.00 


.0 


4.00 


• So 


4 


4.00 


1. 00 


4 7 


— 3 


3-50 


.0 


3.50 


•50 


4 


3.50 


.87^ 


4 6 


— 2 


3.00 


.0 


3.00 


•50 


4 


3-oo 


• 75 , 


4 5 


— 1 


2.50 


.0 


2.50 


•50 


4 


2.50 


.62V2 


4 4 




2.00 


1. 00 


3-oo 


• 75 


4 


3-oo 


•75 


4 3 


+ i 


1.50 


1.50 


3.00 


1. 00 


4 


3.00 


• 75 


4 2 


+2 


1. 00 


2.00 


3.00 


1.50 


4 


3.00 


•75 


4 i 


+ 3 


.50 


2.50 


3-oo 


3-oo 


4 


3-oo 


•75 



disadvantage of either," 1 is hardly sustained. In the eyes of the 
worker who had to double his effort to bring his time down 
from 8 to 4% hours, there is no advantage in this system over 
the straight time system and in so far as the Gantt system has 
made him hustle and left him with $2.12 for his effort, instead 
of $4.00 which he would have received had he continued to 
work at his accustomed easy pace, it looks like a deliberate 
scheme to hold out a bait which is just beyond his reach, and 
which benefits the employer exclusively. 

From the point of view of labor costs, the Gantt system of 
payment will prove of great advantage to the employer, for 
the cost per unit of product (see Table 3) will be reduced from 
$1.00, if the worker did his task in 8 hours, to 62}4c if it took 
him only 5 hours. 

As soon as the worker has made his task, his payment be- 
comes fixed. In our illustration it equals to $3.00 for 4 hours. 
If he should go beyond the standard and gradually reduce his 
time for the task to three, two or one hour, he would continue 
to receive $3.00 for the task. In other words, — from the moment 
he meets the task the payment becomes a straight piece-rate and 
his earnings per hour mount as he gains in speed, as they do 
under any piece-rate system. 

1 H. L. Gantt, Work, Wages and Profits (The Engineering Magazine 
Co., 1919)* P» 165. 



PROBLEMS OF LABOR 93 

Turning to the illustration in Table 3: The cost per unit of 
product when the task is achieved is 75c. As the workman gains 
in speed beyond that point his earnings rise rapidly from 75c 
per hour to $3.00 per hour. It must be borne in mind, however, 
that "the task is based on a detailed investigation by a trained 
expert of the best methods of doing the work" and that in 
order to earn bonus the work must not only be done in standard 
time or better, but must be "up to the standard for quality." 1 
Under these conditions, it is very seldom that the worker can 
beat standard time very materially and, therefore, the earnings 
above $1.00 per hour as worked out in Table 3, are more in 
the nature of a mathematical illustration of what the earnings 
may theoretically rise to, rather than examples of practical 
reality. There is, therefore, not likely to be much incentive to 
further speeding after the worker has made his task. 

[As viewed by Mr. Gantt himself, his] system of pay is really a com- 
bination of the best features of both day and piece work. The work- 
man is assured his day rate while being taught to perform his task, and 
as the bonus for its accomplishment is a percentage of the time allowed, 
the compensation when the task has been performed is a fixed quantity, and 
is thus really the equivalent of a piece rate. Our method of payment 
then is piece work for the skilled, and day work for the unskilled, it 
being remembered that if there is only work enough for a few, it will 
always be given to the skilled. This acts as a powerful stimulus to the 
unskilled, and all who have any ambition try to get into the bonus class. 
.... The day worker who has no ambition to become a bonus worker 
usually of his own accord seeks work elsewhere, and our working force 
soon becomes composed of bonus workers, and day workers who are try- 
ing to become bonus workers. x 

Of course it would be impossible to discriminate in such a 
way between one set of workers and another in a union shop, 
the union usually insisting that when there is not enough work 
to keep everybody busy, work must be divided among all as 
equally as possible. Still, the system would tend ultimately for 
the best workers to remain at the plant. 

The Emerson Bonus Plan, in the words of the author of the 
plan, 

Its main features are summed up by its author under the follow- 
ing 3 heads : 

being a later evolution than the plans of Halsey, Rowan, Taylor and 
Gantt, had the benefit of their experience, owes much to them, but also 
aimed to avoid any weaknesses in the earlier plans and to add valuable 
features not hitherto included. 2 

i. Efficiency is determined not for each operation or job, but 
for a period of time, such as a day, week or month. 

1 Ibid., 1, c, p. 149. 

1 Ibid., 1. c, p. 165 

2 Harrington Emerson, A Comparative Study of Wage and Bonus 
Plans, p. 18. 



94 SELECTED ARTICLES 

: 2c Efficiency is expressed in the form of a percentage ob- 
tained by dividing the aggregate standard time by the aggregate 
actual time. Thus, if the total number of hours worked in a 
week is 250 and the worker has delivered 260 hours of standard 
work, his efficiency is 260 divided by 250, or 104%. 

3. The transition from inefficient time pay to standard time 
and bonus is made not abruptly, as under the Gantt plan, but 
gradually. Bonus begins when the worker reaches 67% effi- 
ciency instead of 100%, as under the Gantt plan. The bonus at 
67% is insignificant, being only one hundredth of one per cent 
of the hourly wages earned. It gradually increases by fractions 
of one per cent until it equals to 1% at 74% efficiency, 2% at 
77% efficiency, 3.3% at 80% efficiency, 10% at 90% efficiency. 
From that point on, the bonus increases at the rate of 1% for 
each additional per cent efficiency, so that it equals 20% at 
100% efficiency, 25% at 105% efficiency, etc. 

In other words, the worker is paid for full standard time, if 
he does the work in less than standard time, in addition to a 
bonus of twenty per cent. Thus, if standard time for perform- 
ing a certain operation is 4 hours (See Table 4), and the 
hourly rate is 50c, and the worker has accomplished his task 
in three hours, showing an efficiency of 133%, his compensation 
will be as follows : 

3 hours actual time — 3 x 50.. $1.50 

1 hour saved from standard 3 hours actual time — 3 x 50.. $1.50 

time 1 x 50 50 Bonus 53%, on 3 hours worked or 

Bonus 20% on 3 hours worked 53% of $1.50 80 

— 20% of $1.50 30 or: 

Total $2.30 

Total $2.30 

making the total earnings per hour equal $2.30 divided by 3, or 
77c. This plan has the obvious advantage over the Gantt plan 
that by avoiding the sudden jump from no bonus when work is 
less than 100% efficient to a bonus of from 20 to 50 per cent, 
when 100% efficiency is attained, it does away with the gamb- 
ling with the worker's energy and ambition and offers him a 
gradually increasing reward as his efficiency advances from 67% 
upward. At every stage of improvement beyond 67% efficiency 
the worker is encouraged and has the satisfaction of increasing 
his hourly earnings. 

As already stated, the Emerson plan provides for increasing 
efficiency not only on separate jobs, but per day, week or month, 
while the Gantt and other plans have the job as a basis. This 
has a tendency to reduce the worker's earnings under the Emer- 
son plan, since it is impossible to maintain as high a rate of 



PROBLEMS OF LABOR 95 

efficiency continuously as it is on separate jobs; the figure repre- 
senting aggregate efficiency is thus reduced, reducing the aver- 
age hourly earnings. On the other hand, when the worker dis- 
covers this, he will realize that overspeeding on individual jobs, 
causing exhaustion and lowered efficiency on subsequent jobs, 
brings a lower aggregate income than a more moderate efficiency 
steadily maintained. This should furnish the best corrective 
against undue speeding. 

From the point of view of labor cost, the Emerson plan is 
like the Halsey and Rowan in that it provides for a constantly 
reduced cost per unit of product as the efficiency of the worker 
and his earnings per hour increase while, under the Gantt plan 
the cost remains the same after the worker reaches and passes 
100% efficiency. 

[As Mr. Emerson says] "An employer can well afford to pay a large 
bonus; he can well give the total wages saved as bonus and derive his own 
benefit from the increased output of the plant and the greatly reduced 
overhead. It is for this reason that for efficiencies above 100% the worker 
is given as a bonus his hourly rate for all the time he saves in addition 
to 20% on the wages for the time he works. x 

In spite of that, the labor cost per unit of product continues 
to drop under the Emerson plan after the worker has exceeded 
100% efficiency. Thus in the illustration in Table 4 at 50% 
efficiency the labor cost to the employer per unit of product is 
$1.00; at 66^3% efficiency the cost drops to 75c; at 100% effi- 
ciency the cost is reduced to 60c ; at 200% efficiency it goes down 
to 55c, and so on. At the same time the worker's hourly earn- 
ings advance from 50c to 52c, 60c and $1.10. 

1 Ibid, 1. c, p. 19. 

TABLE 4 
Illustration of Emerson's Bonus Plan 
Rate: 50c per hr. Bonus: Commencing with one-hundredth of 1% for 
67% efficiency, it rises to 3-3% for 80% efficiency; to 10% for 90% 
efficiency; and thereafter increases at the rate of 1% for each 1% in- 
crease of efficiency, so that it is 20% at 100% efficiency; 25% at 
105% efficiency, etc. 

Hours Compensation Labor Cost 







►» 


& 


D 








bog 


bo 


a 










£ 


^ bO 


c 


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oo SELECTED ARTICLES 

Conclusion 

Each of the systems of compensation mentioned has its ad- 
vantages and disadvantages and the adoption of one or the 
other will depend upon the aim in view. 

Whatever the system adopted, assuming that the object is 
to adopt a system of compensation that will secure efficiency 
without overspeeding ; that will tend to keep down costs, while 
raising wages ; and that will appeal to the sense of fairness of 
the worker, certain general principles suggest themselves for 
our guidance : 

1. The workman is entitled to a living wage as a minimum 
compensation for his time and effort which he spends at the 
plant. Whatever the form of compensation, he must receive 
a basic wage measured by the time he spends at the plant, at a 
rate sufficient to yield a living wage. 

2. If workers are not to be prejudiced against any system 
of compensation based on output (whether piece-rate or bonus) 
they must be paid the basic hourly rate for all idle time spent 
at the plant through no fault of their own. 

3. If workers are paid by the piece, the rates must be so 
adjusted as to yield the worker a distinctly higher wage (from 
20% to 50%) than the minimum wage paid the worker of 
ordinary speed and skill. 

4. W r here time and bonus rates are paid, they should be so 
arranged as not to rob the worker of the fruits of his extra 
exertion on the one hand, and to discourage excessive speeding 
on the part of the worker beyond what has been demonstrated 
as safe by careful time studies ; excessive speed being harmful 
to the health of the worker and to the quality of the product. 

5. Brief rest periods in addition to the noon recess, or 
frequent changes of position in receiving and turning in work, 
should be provided to avoid undue fatigue and monotony. This 
will safeguard the health of the workers and in the end result 
in increased output. 

6. Under no circumstances should piece or bonus rates be 
cut on the ground that the earnings of the workers are too high 
so long as there is no change in the operation or in the manu- 
facturing process. 

7. If the opposition of workers to new machinery, or im- 
proved labor-saving methods, due to fear of losing the job, is 
to be overcome, employes made superfluous must never be dis- 



PROBLEMS OF LABOR 97 

charged. Ordinarily, the growth of the business, the natural 
labor turnover, and the possibility of transfers to other de- 
partments, will take care of the superfluous workers. If these 
should fail to materialize as rapidly as may seem desirable, it 
will be cheaper in the long run to employ the workers on their 
jobs on part time, paying full time wages, than to show indif- 
ference to the employe's fate by "firing" him unceremoniously. 
8. The worker should share in the benefits resulting from 
the introduction of improved machinery and increased efficiency. 
Whether this share should take the form of higher wages, 
shorter hours, or a share in the general profits, or in the specific 
savings resulting from the improvements, is a subject so large 
as to require separate treatment. 



STRETCHING THE PAY ENVELOPE 1 

Some Nezv Methods of Fixing Wages 

One of the paradoxes of the war is the stimulus it is giving 
to human conservation. Witness the awakening in Great Britain 
to the inefficiency of overwork as proven by the reports of the 
Committee on the Health of Munition Workers, and as indi- 
cated by Lord Leverhulme's advocacy of a six-hour day. The 
United States has been at war nine months as against Eng- 
land's three and one-half years, but the same motives that 
created a new attitude there toward the well-being of the work- 
ers have been active here since the struggle in Europe began. 

Two employment managers for large corporations stated 
the case for me not long ago. One of them was in a state of 
nerves when I called on him. He snorted at my questions. 
There was nothing to tell me. Anybody ought to know what 
the job of an employment office is. They were doing the only 
thing anybody did — "hustling for men." And he turned his back 
on me. The other man was more of a philosopher. "The func- 
tion of an employment department," he told me, "is to keep 
men from quitting." 

Both men really told the same story. Men are not so easy 
to get as in the days before the war, when immigrants were 
entering our doors at the rate of a million a year. At the 
same time our industries are expanding and the demand for 

1 By John A. Fitch. Survey. 39:411-13. January 12, 19 iS. 



98 SELECTED ARTICLES 

men is increasing. It is a time when employment managers 
are hustling for men and, after they get them, praying that 
they won't quit. The situation was admirably summed up at 
the Safety Congress last fall, when a representative of one of 
the railroads expressed amazement at the idea of discharging 
men who disobeyed safety rules. "Any safety man on our 
railroad," he declared, "who recommended firing a man would 
get fired himself." 

The situation before the employers of the country is not a 
new one. They have had trouble before in getting men, and 
there is always trouble about keeping them. But the old situa- 
tion has been greatly intensified in many industries by the war. 
It is a commonplace among employers that when labor is scarce 
and wages are high the tendency of workingmen to drift about 
is greatly increased. It is also a well-known fact that under 
such conditions men are not regular in their attendance at 
work. They take a day off when they feel like it, secure in 
the moral certanuy that their jobs will be waiting for them 
when they go back. 

Old though the difficulty is, good, hard, constructive think- 
ing about it is comparatively new. But now some of the keen- 
est minds in the industrial world are at work on the task. 
Under the pressure of industrial necessity in war time more 
thought is being given to the welfare of wage-earners than 
in any previous time in the nation's history. The question is 
how to get and keep men, and the answer so obviously lies in 
the degree to which men are satisfied with the conditions of 
their work that it is a wonder no one has thought of it before. 
If the wage-earner is to be kept on the job, means must be 
taken to make the job worth while. 

The most obvious need of the wage-earner is an adequate 
wage. The first question of an applicant for work is what 
will the job pay. More unrest is provoked and more strikes 
occur over the wage question than over any other one thing. 
In attempting to attract labor and create satisfaction at a 
time when prices of necessities are mounting to unheard of 
levels, it is clear that attention must be directed first toward 
the adequacy of the wages scale. 

Since the beginning of the war various methods of wage 
adjustment have been put to the test. Many corporations 
adopted the war bonus idea. They took the view that the 
outlook was too uncertain to justify a permanent advance; if 
affairs took a bad turn it would be much easier to discontinue 



PROBLEMS OF LABOR 99 

the bonus than to reduce wages. In order to emphasize the 
difference between the regular wages and the bonus, the latter 
is paid at more infrequent intervals, in some cases monthly, 
in others quarterly, sometimes in a lump at the end of the year. 

The bonus plan as a method of relieving the pressure of 
the high cost of living is, of course, subject to the same diffi- 
culty that affects any other method — if it is not accurately 
based on the actual increase in costs, it will not allay unrest. 
There is a special objection, also, due to the traditional opposi- 
tion of organized labor to bonus schemes of all sorts. They 
object to a war bonus for precisely the reason that leads em- 
ployers to favor it — the ease with which wages can be reduced 
when a slump comes. The United Mine Workers succeeded 
in practically eliminating war bonuses from coal mining. 

There have been impressive increases in money wages in all 
industries. Many corporations have disregarded the danger 
involved and have raised the scale of payments as if present 
conditions were to be permanent. At periodic intervals one 
reads of another advance and yet another and then another on 
top of that, until the impression gets abroad that the working 
people of the country are rolling in wealth. 

To judge of the meaning of such advances one needs to 
check them up against the increase in the cost of living. Per- 
haps the most illuminating example is the United States Steel 
Corporation. Repeatedly during the last two years the cor- 
poration has increased the wages of its employes, each time 
by 10 per cent. Three times in 1916 such increases were an- 
nounced, taking effect on February 1, May 1 and December 15; 
and twice in 191 7, on May 1 and October 1. This makes an in- 
crease of over 60 per cent in a period of twenty-one months, 
a rate of advance almost without precedent. 

Wages Lagging Behind Food 

The significance of this action can be gauged only by plac- 
ing alongside of it the figures of advanced living costs. The 
Annalist publishes every week a chart on which is plotted the 
curve of the wholesale price of twenty-five principal food prod- 
ucts. The index number given on this chart for February I, 
1916, was 157. For October 1, 1917, it was 280. 

The fact that in the same period of time wholesale prices 
of food advanced 123 per cent while wages rose only 60 per 
cent does not indicate that the rise in the cost of living has 
been twice as rapid as the increase in the wages of steel work- 



ioo SELECTED ARTICLES 

ers. Rent is one of the most important of factors entering 
into living costs and, in general, rents have not gone up as 
rapidly nor proportionately as high as food prices. Other fac- 
tors entering in do not show so rapid an advance. Neverthe- 
less, when wholesale prices of food go up twice as fast as 
wages, it is safe to assume that the wage-earner's .income- has 
lagged behind in the race with his necessities. It is clear, there- 
fore, that wage increases in themselves are not sufficient to 
maintain the worker in statu quo. They must advance pari 
passu with the movement in the cost of living if he is not to 
be worse off than before. 

Since the war began, there has arisen a new method in wage 
payments. The plan is to establish a wage system that will 
rise automatically with the cost of living. The Oneida Com- 
munity, Ltd., adopted a bonus plan two years ago, basing the 
extra payment on Bradstreet's index figures. Each month every 
employe rated at $2,000 or less receives in addition to his regu- 
lar pay, a "High Cost of Living Envelope." Its contents, based 
on Bradstreet's figures, fluctuate with the changes in prices. 
Thus, in January, 191 7, the envelope contained an additional 16 
per cent based on the regular wages and in December, 1917, 
the bonus was 32.75 per cent. 

A similar method is used by the Kelley-How-Thomson Com- 
pany of Duluth, and by the George Worthington Company of 
Cleveland, both in the wholesale hardware business. 

To trade unionist these plans, since they are pure bonus 
schemes, would doubtless be objectionable. It must be recog- 
nized, though, that these plans are quite different from the 
ordinary bonus idea. They represent a distinct effort to make 
the wage scale expand in direct proportion to the changes in 
the cost of living. But like the other bonus plans, the arrange- 
ment can be revoked, without any actual cut in wages appearing 
to take place. 

More interesting, therefore, are the plans that have been 
adopted within the last year and a half by two large employing 
companies, one in Detroit and the other in Syracuse, N.Y. 

In 1916 the Solvay Process Company in Detroit was hav- 
ing difficulty in keeping men. After some investigation, it was 
decided that the chief difficulty was with the wages. Conse- 
quently, after conducting a study of the cost of living, the com- 
pany made an estimate of the minimum cost of living for a 
family of standard size and then raised wages to that point. 
Immediately the groceries and other stores in the vicinity of 



PROBLEMS OF LABOR 101 

the plant put up their prices so as to absorb all of the in- 
creased wages. The company then started a grocery store of 
its own and sold to its employes at cost. With this beginning 
a continuous check is now being made on changes in the cost 
of living. Two men on the staff of the employment manager 
devote themselves exclusively to this task. They have about 
one hundred families who are keeping careful accounts of their 
expenditures on forms provided by the company. Checked 
against these figures is an estimate made by a local hospital of 
the cost of necessary rations on a scientific basis. Government 
figures are also used. With these as a basis, it was decided 
last summer that a minimum living wage should yield $1,200 a 
year. Accordingly the wage rate was so adjusted as to pro- 
vide, with overtime and bonus, a minimum income of $100 a 
month. 

W r ith a similar desire to establish a wage rate that would 
have some relation to the cost of living, the Franklin Auto- 
mobile Company made a study early in 1916 of the cost of 
living in the neighborhood of its plant in Syracuse, N.Y. The 
year 1905 was taken as a base for determining what an ade- 
quate wage should be in 1916, because the records showed that 
they had an unusually low labor turnover that year, indicating 
that the workers were satisfied with the conditions then pre- 
vailing. A study was made to discover the extent to which 
the cost of necessities has risen since 1905, and this was 
checked against the actual expenditures in 1916 of a large 
number of families in which the wage-earner was a Franklin 
employe. As a result of this investigation a very elaborate 
formula was worked out for determining the wages that should 
be paid. Provision was made for a continuous study of the 
cost of living, and the plan calls for a revision of wages every 
three months in order to maintain the proper relation to the 
movement of costs. 

One of the items that went into the formula at the Franklin 
plant was a figure representing the length of service. For 
each year of service, 2^4 per cent of the base rate is added to 
the wage. This, according to George D. Babcock of the Frank- 
lin Company, who wrote of it in Industrial Management, was 
to pay "for the loyalty which develops in employes who have 
been long in service, for the historical knowledge which they 
have, for the esprit de corps which comes through long periods 
of association with men, as well as for a reduction in the 
frequency of labor turnover. ,, 



/ 



102 SELECTED ARTICLES 

Making Money Worth More 

Employing corporations are beginning to realize that con- 
tinuous service is worth paying for. Sears, Roebuck & Co. 
in Chicago add 2 per cent to a man's wages after he has been 
in their employ two years, and after that I per cent is added 
each year up to ten years of service. This plan is being adopted 
widely, and since it is in addition to any other increase in 
wages that there may be, it provides a real incentive to remain 
in the employ of the company. 

Another method having in view the stretching of the pay 
envelope to cover the cost of living, which has the added 
advantage of costing the employer less than an increase in 
wages, involves various attempts to increase the purchasing 
power of the wage-earner's money. • Throughout the Middle 
West the establishment of grocery stores in a space provided 
by the plant, and in which the employes can purchase goods 
at cost, is becoming quite general. Employers recognize that 
the establishment of lunch-rooms where food is furnished at 
cost, or close to cost, has the same advantage and, of course, 
in addition to that it has the advantage of providing a sanitary 
dining room and good hot food, the effect of which is marked 
on the wage-earner's -health and consequently on his efficiency. 

The effect of the war on wages can hardly be considered an 
evidence of increased recognition either of the rights or the 
needs of labor, because in general, however great the increase 
in money, real wages have probably declined. It is an encour- 
aging sign, however, when two large employing corporations 
like the Franklin Company and the Solvay-Process recognize 
so clearly their obligation to pay a living wage that they are 
unwilling any longer to leave the determination of the amount 
to the blind law of supply and demand. And the effect of the 
movement thus begun will outlive the war. 



.* 



WAGES AND SOME INDUSTRIAL 
FALLACIES * 



Our present critical condition in industry is due almost 
wholly to labor's new self-assertion. It is hardly necessary to 
enter into the many reasons for this new self-assertion of labor. 
We know its sudden growth has been fostered by the war. 

1 By Willis Wisler. American Federationist. 26:1036-40. November, 
1919. 



PROBLEMS OF LABOR 103 

Great emergencies have a levelling effect; artificial barriers can 
not stand up at such times. It is not so much what labor has 
done that disturbs employers as what it is emboldened to suspect. 

Under autocracy this new mood of challenge must lead to 
some form of protest. The caste that strives to impose its 
control upon labor must either justify itself by leadership, it 
must stand aside, or it must establish itself by violence. 

The musket made the medieval peasant more deadly than 
his lanced and plumed overlord, and by this fact it marked 
the passing of a social order. Trained intelligence may be 
now about to repeat the event. 

If rule by caste, high or low, shall ever come upon the 
United States it can only be by the creation of caste lines im- 
posed by an ill-advised industrial Bourbonism. The degree of 
fear an employer of men expresses concerning the menace of 
"radicalism" in this country is a fair index of his real auto- 
cratic intent and ideals. 

Men, however, who are familiar with the spectacle of their 
fellows rising from the ranks of wage-earners to places of the 
highest affluence and esteem, can have no intention to tear down 
the golden ladder of opportunity. The most passing compari- 
son must show the very real differences between our conditions 
and those of Europe. The very elements making for success 
of radicalism abroad are until now happily lacking here. 

There is, however, a condition — though not a fact — of caste 
that threatens. It grows out of a shrewd though perhaps mis- 
taken conviction on both sides that solidarity is the best pro- 
tection, 

While the American is a wage-earner he senses the advan- 
tages he has in collective bargaining. In solidarity he sees his 
defense against the monopoly of jobs in the hands of the em- 
ployers. 

The employer, too, compels solidarity so far as he can by 
keeping labor in the "laboring class." He must look with scant 
favor on his employe climbing out of the wage and vocational 
limitations he has tried to fix at the hiring moment. 

Yet both violate solidarity when opportunity offers. The 
wage-earner becomes an employer if he can do so. The em- 
ployer recruits his executives necessarily, for the most part, 
"from the ranks." Thus with us "solidarity" in the old world 
sense is a technique of industrial strategy rather than a social 
fact that can be physically perpetuated. 



io 4 SELECTED ARTICLES 

Behind this technique of industrial strategy is functioning 
a bread and butter philosophy. Perhaps it were better to say 
a "bread and butter opportunism." Organized labor in America 
is essentially pragmatic; it gets all it can whenever it can. I 
am speaking now as a layman. I shall surely not attempt to 
speak for organized labor. But there has certainly been no 
stampede to any philosopho-political program such as we are 
fond of attributing to English labor. 

Here in America we are transients in labor — at least we so 
love to assume. We require no political upheaval to break our 
way through economic barriers. We ask only to be decently 
comfortable and self-respecting while we tarry at the bench 
or at the machine. Only men reconciled to no escape by in- 
dustrial effort grow urgent and evolve philosophies. 

It is our good fortune to represent in the eyes of the world 
of labor that best standard. When American wages and stand- 
ards of working and of living conditions shall have become — 
through international knowledge — world standards, the day of 
American exploitation of foreign labor and the American use 
of foreign labor as American labor's competitor will have 
passed. The fortunes of American industry must rest on some 
other basis than the misfortune of any group of workers. 

For the accomplishment of this great project, the world en- 
franchisement of labor, the machinery is now in the making. 
An international labor congress can concentrate, by centraliza- 
tion, the energies and intelligence of labor. Universality of 
knowledge will level up the workers of all nations. And for 
this project America is well fitted to furnish the sanest leader- 
ship — a leadership which it will be hoped will not attempt to 
create a fictitious dignity of labor by the perpetuation of a 
caste, but which will insist on decent living and unobstructed 
opportunity for wage-earners on the sole basis of their being 
human beings. 

All that sincere persons, who differ in opinion, need do to 
come to agreement is to argue their differences sufficiently. The 
reason most controversies end in protracted antagonism is that 
they have not been carried to the essential limits of definition — 
the coincidence of meaning in the fact has not been reached. 

One of the commonest faults is classification by coincident 
phenomena. A good illustration of this is the resentment of 
organized labor against the physical examinations of new em- 
ployes. Physical examinations of applicants has been some- 
times used by employers or their agents to exclude so-called 



PROBLEMS OF LABOR 105 

"trouble makers." Therefore, physical examination of new em- 
ployes needs to be abolished? Surely we are capable of better 
reasoning than that. It is not the physical examination that is 
bad, but the misuse of this sound precaution for discriminatory 
purposes. 

This kind of loose reasoning has done much harm. It seems 
as though this kind of reasoning has placed organized labor 
at a disadvantage with regard also to industrial representation. 
The condemnation by organized labor should have been not 
against industrial representation, because much of it is specious, 
but it should have been against the obstruction of absolute 
freedom of suffrage and against the sinister emasculation of its 
legislative function. 

The real ground for objection by American organized labor 
to industrial representation is better indicated in its reference 
to these industrial representation plans as "Company or Em- 
ployer Unions." It is fairly evident that organized labor has 
all along felt sure of an essential insincerity on the part of 
American employers. 

The American Federation of Labor, it seems, fears that 
once American organized labor has been disorganized and 
rendered pliant by the quasi liberality of industrial representa- 
tion plans outside of unions, then — so say the leaders of organ- 
ized labor — the wage-earner will again find himself alone and 
stripped of his defenses in the perpetual wage war. 

This may be so, but it might well work the other way. 
Company unions, subjected to oppression, might well make 
common cause with other company unions in their industry and 
so again coalesce into a national organization with, its hands 
well trained and gripping the very vitals of their industries. 

Organized labor might well give this possibility its closest 
thought. By capturing all genuine works committees and de- 
stroying the rest it would have gained access to the essentials 
of wages, hours, working conditions, and to economic policies 
through a door which the employer himself has opened to la- 
bor. Thus, organized labor might recoup the poor strategy 
which let employers strip its crafts of their monopoly of that 
trade skill which employers, by experts and research and vesti- 
bule schools, have shrewdly made their property. In the re- 
sultant spectacular rise of the semi-skilled — the great menace 
to craft unionism — should have been read the ominous hand- 
Writing on the wall. 

Organized labor may be distrustful of the employer's dis- 



106 SELECTED ARTICLES 

position to respect the rights of his employe, but they seem to 
be no less distrustful of the employe's ability to safeguard his 
rights. The employer, they say, has access to experts — trained 
men to advise him. Why, then, shall the employe be denied a 
like opportunity to avail himself of the organized skill the 
unions can supply to him? Merely to enfranchise a worker 
does not automatically endow him with political competency. 
To elevate him to the office of works representative does not 
assure to his associates, ipso facto, adequate representation. 
But let us bear in mind that this initial inexperience will pass 
with time and use and that employers may find themselves in 
time matched eye to eye with men who can effectively demand 
from them genuine leadership or retirement. 

The facile assumption of the equality of labor and capital, 
of employe and employer, is prima facie untenable. If this 
were true there would hardly be employes. Nor are their in- 
terests at all so mutual as our popular platitude would assume. 
There is, to be sure, a common interest in the creation of 
wealth, but in its distribution there can be little of mutuality. 
Until some equitable distribution, accepted on both sides, by a 
common compromise agreement or because of an inescapable 
accuracy of apportionment, this distribution must be governed 
by the relative strength and the effective force applied on each 
side. 

Managerial skill at the point where planning meets produc- 
tion is the supreme strategic point in future industry. The 
forces which shall control the production, executives who 
directly supervising labor, translate plan into product, are the 
forces that can control industry. Employers already have 
sensed this and they are hastening to bind to them these minor 
executives by developing foremen's training courses. 

It is about this participation in management and in the divi- 
sion of the wealth produced in the industry that the impending 
industrial contest must revolve. Profit sharing can not satisfy 
this contest. The fallacy of profit sharing lies deeper than its 
mistaken psychology, deeper than its inconsistency in not shar- 
ing deficits, deeper than its assessing on the worker in reduced 
dividends losses usually beyond the effect of his individual enter- 
prise and industry; it lies in an intrinsic dishonesty. Many em- 
ployers, moved by the most honest intention, have been per- 
plexed at the general and apparently increasing distaste among 
their employes for profit sharing systems. 

In large measure this disfavor rests in an instinctive resent- 



PROBLEMS OF LABOR 107 

ment against the assumption by the employer in such plans of 
priority of claim on all surplus over the cost of production. 
The employer by granting profit sharing takes credit for a spe- 
cial virtue. To the laborer this must often smack of that 
benevolence of the robber who graciously makes to his victim 
a gift from part of the spoils. 

There are arguments for deferred wages, but for profit 
sharing — except under a real partnership — none that are eco- 
nomically sound. The conviction of the worker that wages 
have been curtailed to effect the dividend is, so far as the eco- 
nomic fact is concerned, a correct view. That such is the in- 
tention of the employer — either to cover poor management or 
to keep down the current wage scale — may sometimes be true. 
But even if it were not true the fact would remain that any 
attempt to solve the wage problem by a "profit-sharing system" 
is clear proof of a complete misconception of the meaning of 
wages. 

Adam Smith, back in the eighteenth century, established 
the cost of living as the controlling factor in the law of supply 
and demand in labor. There are modifying factors, such as 
working conditions and sales prices, but in the main, in actual 
shop practice, little improvement on Adam Smith has yet been 
made. 

When the mechanistic theory of labor came in with Taylor, 
Emerson, and the "efficiency school," the employers of labor 
who became adherents of the school of management proceeded 
confidently upon the scientific concept that labor is a commodity. 

So far as labor is a factor to be applied to production like 
power, and materials, and overhead, they were consistent. The 
real error lay in not distinguishing between labor as a com- 
plex of applied force to be released by a human self-determining 
being, and value released by an inert and non-sentient mecha- 
nism. Even so, labor owes much to this scientific management 
movement. It replaced the old concept of labor as a chattel, 
with wages a grudging concession, by the idea of labor as a 
commodity to be purchased at market rates. Production re- 
placed time, and wages — of necessity under their system — be- 
came an incentive rather than a concession. 

This, while improving the status of the worker, still fell as 
far short as ever of the real meaning of wages. For all their 
bold pretension to science, nothing could be more crudely unsci- 
entific than scientific management's interpretation of the mean- 
ing of wages. The direct ratio between the worker's actual con- 



io8 SELECTED ARTICLES 

tribution to the value of the product and his wage they failed to 
recognize. 

To point out that time and motion study assumed such a 
ratio does not answer this criticism because it is not in any 
analysis of work into its elements that such a ratio is estab- 
lished, but in the true evaluation of the work performed. In 
competitive products, where profits are slight, some such ratio 
may occur but hardly by any consciously deliberate purpose. 

The efficiency engineer, persisting in his misconception of 
wages, tried by the introduction of welfare work to build up 
the necessary good-will which the mere stimuli of bonuses and 
premiums could not evoke. Against this there rose inevitably 
the same unreasoning but proper resentment workers feel 
against profit sharing. Something that Avas their own was being 
withheld to be presented to them in the guise of special re- 
ward or benevolence. Wage-earners felt deceived and injured 
even when they knew their employers were w T ell intentioned. 

What the wage earner of today wants is that which is his 
own. If he seems to be asking for a great deal more it is in 
part because he is human, and in part because he is ill informed ; 
not necessarily ill informed by agitators and extremists, but 
ill informed in the past by employers and capitalists. So assid- 
uously have these ''Captains of Industry" paraded their parlor 
magic of finance and administration that the groundlings, too 
well befooled, now clamor for the materialization into their own 
hands and pockets of the mysteriously conjured coin and rab- 
bits ! These impressive gentlemen may have to do more than 
merely brandish their empty silk hats and turn back their cuffs 
— they may have to submit, with such good grace as they can 
muster, to a rather horny handed and thorough searching. 

It will be no easy matter for management to live down the 
indiscretions of its capitalistic associations. Management, to 
our thinking, must be divorced from capital. Management must 
stand on its own merits — a type of labor. 

The great problem of the future must be the adequate mea- 
surement of the contribution of the three factors — labor, man- 
agement and capital — to the product so that each may receive 
its commensurate share. 

Capital will continue to scrutinize management before it in- 
vests ; labor should do the same before it invests. For until 
labor shall be regarded as an investment and not as an expendi- 
ture, no real progress beyond an armed truce can exist. 

And if labor shall be regarded as an investment, wages must 



PROBLEMS OF LABOR 109 

take some account of depreciation. The worker who invests 
himself in industry at a wage which aims to meet only current 
living costs, must expect to find himself in old age a dependent 
on private or public charity. This is an arrangement neither 
humane or intelligent. Industry owes a worker, in return for 
his productive years, a fair and dignified assurance of his being 
taken care of through his non-productive years. In short his 
depreciation needs to be written off, whether in the form of a 
pension by the specific industry he has served, or by the opera- 
tion of compulsory savings out of an adequate wage, or by the 
application of state insurance assessed on all industry, it is 
not necessary at this time to say. The essential principle to 
keep in mind is that wages that pretend to be a complete return 
for labor given without making provision for depreciation, dis- 
ability or superannuation, are economically unsound and can 
never satisfy labor's unrest. 

The time may never come when the refinements of account- 
ing can effect, for the purpose of adequate wages, accurate 
measurement. In the meantime approximation must do, but 
approximation by an agency all parties can and will trust. 



PAYMENT BY RESULTS 1 

The dispute which led recently to a national lock-out in the 
furniture industry has presented one interesting feature which 
might with advantage be copied in all Labour disputes of im- 
portance. Throughout the dispute each party has courted pub- 
licity and has repeatedly issued to the Press statements giving 
its version of the circumstances and of the questions at issue. 
By this means the public has been placed in a far better posi- 
tion than usual for passing judgment and forming an inde- 
pendent estimate on the issues involved. It has at least found 
out what is the real point at stake, and that is often by no 
means easy to discover even in the most serious and protracted 
disputes. 

But while the furniture manufacturers have set an excellent 
precedent by courting publicity in this manner, it is impossible 
to congratulate them upon the matter of their more recent 
pronouncements. As the dispute has dragged on it has become 
manifest that, although there are other issues involved, the one 
point which has effectually stood in the way of a settlement is 

1 The New Statesman. September 20, 19 19. p. 609-10. 



no SELECTED ARTICLES 

the question of payment by results. The employers desire to 
impose upon the operatives a system of payment by results 
to which the Trade Unions representing the woodworkers have 
always been and still remain resolutely opposed. Such a situ- 
ation has, of course, often arisen before in many different in- 
dustries. There is nothing new in a dispute of which the cen- 
tral issue is the method of payment to be adopted in a particular 
trade, or in an attempt by employers to impose one system while 
the Trade Unions concerned insist upon another. What is 
peculiar in the present case is the bland and self-confident 
manner in which the furniture trade employers in their mani- 
festoes inform the public that payment by results is clearly in 
the best interests of the operatives themselves and affect to 
treat the Trade Union opposition to it as a piece of quite unex- 
pected and wanton wrongheadedness on the part of the workers. 

The question of payment by results is one of the most hotly- 
disputed issues between employers and workers in at least half 
of the main industries of the country. Practically the whole of 
the building and woodworking trades have always put up a 
strong and united opposition to payment by results in all its 
forms, and for the most part the system has only operated 
in these trades in places where the Trade Unions have been 
too weak to prevent its introduction. The engineering and kin- 
dred trades have been repeatedly troubled by the time-work 
versus piece-work controversy at least for the past half-century, 
and even in the coal industry, where piece-work has long 
been firmly established, the miners have in recent years been 
sriously considering whether to insist on the general adoption 
of a time-work basis of payment. The opposition to payment 
by results in many trades comes not from a wanton blindness 
on the part of the workers but from a serious conviction, which 
may be right or wrong, that payment by results is a bad sys- 
tem for the trades concerned. 

This does not mean either that all Trade Unions in all in- 
dustries are opposed to payment by results or that all employers 
in all industries are in favor of it. Some Trade Unions, such 
as those in the cotton trades, have insisted upon piece-work, 
and have based their whole policy of collective bargaining upon 
its acceptance. On the other hand, some of the worst sweating 
in the less organised trades has been done under a time-work 
system by employers who have resolutely refused to allow piece- 
work to be introduced, and have preferred to rely upon over- 
drive by foremen without paying the higher wages which 



PROBLEMS OF LABOR in 

piece-work might, in these cases, involve. The position differs 
from trade to trade. There is, indeed, a strong body of La- 
bour opinion which is always inclined to favour time-work be- 
cause it holds that payment by results tends to break down 
solidarity and set man against man, and a strong body of 
Capitalist opinion which is always inclined to favour payment 
by results because it believes that it lowers cost of production. 
But, in almost every case, the Trade Unions form their final 
judgment upon the practical issue, and accept or reject pay- 
ment by results according as they believe that, in the particular 
circumstances of their own trade, its adoption will be beneficial 
or the reverse. 

It is a well-known fact that systems of payment by results 
always operate best and with least friction in those cases in 
which the output is easily measurable and least liable to dis- 
turbance by external or variable conditions — in other words, 
where a given expenditure of skill and effort can be relied upon 
to produce a given quantity of production, and where the ques- 
tion of quality is not important because it is largely out of the 
worker's control, being determined mainly by the machine, or 
by some other external factor. In proportion as the conditions 
in any particular trade deviate from this standard, it becomes 
more difficult to agree upon the terms of any system of pay- 
ment by results, or to devise a system which will work with 
even approximate justice. The contention of the workers in 
the woodworking industry is that the conditions of their various 
crafts are such as to make a fair system of payment by results 
impossible. 

(b) Profit Sharing 

PROFIT SHARING 1 

Industrial Democracy in the United States Will 
Come by Practical Application of Profit 
Sharing — Not Philanthropy 
» Share — Not Give 

The profit sharing I believe in is the kind that is real; the 
kind that promotes thorough and efficient co-operation between 
employer and employe; the kind that makes partners of em- 

1 By George W. Perkins, Chairman Profit Sharing Committee, Na- 
tional Civic Federation. From Current Affairs (Boston). 10:3-5, 23-24. 
September 22, 19 19. 



ii2 SELECTED ARTICLES 

ployes; the sort of profit sharing that is practiced between 
partners in a business. Anything short of this is bound to re- 
sult in failure and will widen the breach between employer and 
employes. 

Close observation, coupled with considerable experience, has 
convinced me that practically all the many failures in profit 
sharing, both in this country and in Europe, have occurred be- 
cause at bottom the plans were not honestly devised nor 
equitably worked out. In nine cases out of ten, at some point 
in the practical application of the plans that have failed, the fact 
has developed that they were not mutually beneficial ; they either 
did not enhance the efficiency of the men in such a way as to 
satisfy the employer, or else did not distribute profits in such 
a way as to benefit and satisfy the employes. 

Relationship Changed 

The relation between employer and employe has changed 
with the centuries. Originally it was owner and slave; then it 
was master and man; now it is employer and employe, each 
stage of development bringing the employer and employe into 
closer co-operation. What has caused this change in relation- 
ship? In my judgment the cause is found in the vast and broad 
educational forces that have been at work in the world. Since 
we founded this country we have spent approximately as much 
money on our education systems as on our railroad systems. 
We consider our railroads financially successful if they earn 
dividends. 

Our Educational System 

If our educational systems are succcesful the dividends we 
get from them are minds that think better, more clearly, more 
independently. Right now, this country is getting such divi- 
dends from its vast investments in among many partners. No 
man or firm or corporation that is thinking of adopting profit 
sharing can hope for educational plants. In the industrial world, 
in the relations between capital and labor, between employer, 
and employe, we are getting these very dividends, and getting 
them direct and in cumulative fashion on the wage question. 

In the past, the man who was not educated or trained to 
think independently struck because he wanted $2 a day if he 
was only getting $175; and for quite a period labor differences 
were settled on this basis. I believe that we are rapidly passing 



PROBLEMS OF LABOR 113 

out of that period, for our laboring people are so well edu- 
cated and so able to think independently that, in many cases, 
they are no longer striking for a definite increase in wages, but 
for what they regard as a fairer proportion of the profits of 
the business in which they are engaged. If I am right about 
this, then we are rapidly leaving behind the period when labor 
disputes could be settled b} r a mere increase in wages and are 
entering the period when profit sharing in some form must be 
practiced. Therefore, the question is, how can it be practiced 
effectively? 

Outline of Plan 

A good many years of actual experience have made me very 
optimistic regarding profit-sharing plans worked out along the 
following lines : 

First: every business has, first of all, to earn operating ex- 
penses, depreciation, and fair returns on honest capitalization. 

Second : I believe that every business should consider that 
the compensation paid employes is for the purpose to pay the 
above-mentioned items. 

Third : I believe that any profits over and above such sum 
should, on some percentage basis, be divided between the cap- 
ital used in the business and the employes engaged in the busi- 
ness. 

Fourth : I believe that in neither case should these profits 
be immediately withdrawn from the business ; that they should 
be left in the business for a reasonable length of time, to protect 
and increase its financial strength and safety; that, in the case 
of capital, its share of these profits should be carried to surplus , 
that, in the case of employes, their share of these profits should 
be distributed to them in some form of security representing an 
interest in the business, and that each employe should be re- 
quired to hold such security for a reasonable length of time, 
say three to five years. 

Fifth : I believe that the employes' share of these profits 
should be allotted to them as nearly as possible on the basis of 
the compensation they receive. Up to date, this has proved to 
be the best method. 

Now, let us see what such a plan means : In the first place, it 
means that under such an arrangement each employe becomes a 
working partner in the business. He is on the same footing as 
the financial partners, for if the concern is a partnership with, 



ii 4 SELECTED ARTICLES 

say, four or five members, the partners themselves are drawing 
out each year what, in a way, might be called salaries, viz., 
approximately the amount of money necessary to meet their 
general living expenses, leaving their surplus profits in the busi- 
ness. Any partnership or any profit-sharing plan that divided 
up the profits and withdrew them in cash at the end of every 
3'ear could not last very long. 

Why Some Plans Fail 

Many profit-sharing plans have divided profits with employes 
on a cash basis and turned the money over to the employes 
every so often, usually once a }^ear. The result has been that 
if a man earning $1,000 a year received $200 at the end of the 
year from a profit-sharing plan, he promptly lifted his living 
expenses from a $1,000 basis to a $1,200 basis, and began to look 
upon his income as $1,200 rather than $1,000, and the extra 
$200 did little to increase his activity and efficiency, or to pro- 
mote his intellectual efforts in the business concerned. 

Then, if a period came when business was dull or poor and 
he did not get the extra $200, he found fault with the owners of 
the business and became grouchy and inclined to lose interest in 
his work. If he did not use the $200 for his living expenses, he 
probably invested it in a suburban lot or in some stock that 
was recommended to him, or in something that he knew little 
or nothing about. Then, if his investment began to go wrong, 
he worried about it, and part of the time which he was being 
paid to devote to the business in which he was engaged would be 
expended in worrying about his investment in the business in 
which he was not engaged; whereas, if his money were invested 
in the business in which he was engaged, his desire to see his 
investment succeed and bring him further profits would be con- 
verted into efforts that would be of some practical benefit, not 
only to himself, but to the stockholders and his co-workers. 

In short, little real substantial benefit comes from a profit- 
sharing plan where the profits are paid out in cash, except per- 
haps where a man uses the money toward buying a home. There 
is, therefore, a serious weakness somewhere in such a plan, 
and the weakness lies in the fact that profit sharing cannot be 
really beneficial, either for employer or employe, unless con- 
ducted on a partnership basis and coupled with profit saving. 

Looking at it from the viewpoint of capital, the object to be 
accomplished through the adoption of profit sharing is added 



PROBLEMS OF LABOR 115 

interest in the business on the part of the employes, which in 
turn brings higher efficiency. Looking at it from the standpoint 
of the employe, the object to be accomplished is a fairer re- 
muneration for services rendered. Therefore, any profit-sharing 
plan that fails to accomplish both of these results breaks down 
sooner or later. 

Full Publicity Needed 

In establishing profit sharing it is of the utmost importance 
that the entire organization, the wage and salary earners, know 
in advance exactly what they are expected to accomplish. I 
mean by this that, on entering a new year, they should know 
exactly what the preceding year's accomplishments have been. 
The annual statement of the firm should be full and explicit, 
so that every man engaged in the enterprise will know what 
business was done in the preceding year and on what basis 
profits were and are to be distributed. An honest, detailed an- 
nual statement tells him officially what the profits were, if any, 
and this fixes a minimum goal for the coming year, which every- 
one, individually and collectively, will bend every energy to 
reach and exceed by as large an amount as possible. 

Under such an arrangement as this, each man, in place of 
working solely for himself in his own department, will pass on 
to other departments any ideas that occur to him that might 
help that other department, and in that way benefit the organi- 
zation as a whole. In my judgment, some profit sharing plans 
are radically wrong in this respect. They distribute profits by 
departments or in some way other than on the basis of the com- 
pany's success as a whole. This narrows the vision of the 
individual, and he lacks the proper incentive to help wherever 
he can, whether in his own or another department. 

The right kind of profit sharing offers definite goals that 
an organization, individually and as a whole, can buckle down 
to and work for, and it is astonishing how such a plan of profit 
sharing will heighten the esprit de corps. It removes petty 
jealousies; it makes a man eager to pass his ideas on to the 
man in the next department, and causes them to vie with one 
another to reach and exceed the figures reached in the preced- 
ing year. 

A detailed annual report by the company is not only neces- 
sary to show the organization in prosperous years how the 
profits were arrived at and what they amounted to, but equally 



n6 SELECTED ARTICLES 

necessary in lean years to show how the losses were arrived at, 
what they amounted to and why there are no profits to distribute. 
Gradually, as the employes in the organization become part 
owners in the business, you broaden and deepen their interest 
in their work. They begin to think and speak of the business 
as their business ; they work for it as their business, not your 
business or somebody else's, and in place of "knocking" it they 
praise it and "boost" it in every way they can, for they have 
become part owners through being security holders and are re- 
ceiving their interest or dividends at the same time and in the 
same manner as other security holders receive theirs. In other 
words, once the employes become security holders, they share 
in interest or dividend distributions and other profits, not only 
as security holders, but as employes. 

Objections Answered 

Many people have said to me : "Oh, but it takes a long while 
for a man who is only saving a small sum each year to acquire 
much of a financial interest in the concern by which he is em- 
ployed." I have always found that such criticism comes from 
some, one who has not given sufficient thought to the subject, 
for a small interest means as much to the man having a com- 
paratively small salary as a large interest does to the man of 
large affairs. 

Let us summarize some of the advantages of this method of 
profit sharing: 

First: It is real, it is genuine. The organization as a whole, 
and each individual in it, has a definite goal for the year's work. 
They know at the beginning of a year how much money must 
be earned to cover what we will call fixed charges; they know 
that they are being paid salaries to earn those fixed charges ; 
they know that they share in all profits over and above those 
fixed charges, and they know the basis on which they share, and 
that the amount of such profits largely depends on the indi- 
vidual and collective effort of each individual in the organiza- 
tion. This in itself is of great practical value to the business 
from a dollar-and-cent standpoint. There is no philanthropy 
about it. The employes have a certain definite goal to reach. 
If they reach it they are paid a definite percentage for doing so. 
It is a definite business proposition, based on the principle of 
profit sharing as practiced in partnerships. 

Second : Having reached the goal set, the money over and 



PROBLEMS OF LABOR 117 

above the salaries they are paid — in other words, their profits — 
are invested in the business in which they are engaged and on 
which their whole time and thought and energy should be cen- 
tered. What a great advantage this is to the employer, and 
what a spur and an incentive to the employe ! What more 
valuable insurance policy could an employer have against a 
year of poor earnings? What a real, genuine interest it arouses 
in the worker for the business in which he is engaged! The 
whole atmosphere, the whole relationship is changed. The em- 
ployer need give little thought to whether or not his men are 
"soldiering" on him, whether or not they are really giving to 
their work the best that is in them ; and the employe need spend 
little time wondering whether or not he is being properly com- 
pensated. The whole relationship is placed on a new basis, not 
antagonistic, as heretofore, but co-operative. 

This plan is vastly different from the one now practiced by 
which one set of men working in a business, viz., the capitalists 
and partners, leave most of their profits in the business, while 
another set of men, working shoulder to shoulder with them, 
viz., the employes, each year take their profits out of the busi- 
ness and put them somewhere else. 

Harmful Profit Sharing 

It is also vastly different from the many bonus schemes in 
vogue. It differs greatly from the plan of arbitrarily setting 
aside, in a prosperous year, a certain lump sum of money and 
dividing it on a percentage basis among the employes. Under 
such an arrangement no man who gets any of the money has 
a very definite idea of what he did to earn it, what it represents, 
or what he individually can do to ensure the receipt of some 
such sum during the following year. 

In fact, I am convinced that such bonus giving, erroneously 
called profit sharing, has done more harm than good for in 
many instances it has caused employes to think that said bonuses 
were given them because the business was earning fabulous 
sums of money, a tiny little bit of which was thrown to them 
as a sop to make them feel kindly disposed toward the owners, 
or in order to ward off a demand for a general increase in 
wages. In short such bonus giving simply stirs up trouble 
rather than alleviates it. 

Profit sharing, on the basis I favor, is sometimes objected 
to by men or concerns who do not wish to let even their own 



u8 SELECTED ARTICLES 

employes know how little or how much money they are making 
each year. To such men I always say (and each year I am more 
and more certain that I am right in saying it) that they are 
very short-sighted if they do not hasten to change their policy. 
If they are not making enough money and the business is run- 
ning on a close margin each year, then by all means they should 
set their situation before their men, adopt such a profit-sharing 
plan as I have outlined, and get the genuine co-operation of 
every man towards increasing the profits and putting the busi- 
ness in a prosperous condition. 

They are now paying wages and salaries, and many a night 
go home wondering whether the employes are really earning 
their salaries. Under such a profit-sharing plan as I have out- 
lined they have a substantial guarantee that the salaries will 
be earned, because in aiming to share in profits over and above 
fixed charges the men are all the more certain to earn at least 
the fixed charges. And would any proprietor or manager hesi- 
tate to pay a handsome premium each year for an insurance 
policy guaranteeing that every employe in the business would 
have the business on his mind and work as hard for its success 
as the proprietor or manager does? 

Benefit to All 

One more thought in this connection. The man who is run- 
ning on a small margin and making little profit may object 
to making his business affairs public property, on the ground 
that he would be putting a weapon into the hands of his com- 
petitors. Such a man's best protection against his competitors 
is a loyal, closely knit organization of the highest efficiency, and 
this important advantage he can only secure through a bona fide 
profit-sharing plan. 

As for the man who is making so much money that he is 
afraid to let even his own employes know how much he is mak- 
ing, to that man I say that he is the man who, more than any 
other, is responsible for the serious differences today existing 
between capital and labor, for with the growing intelligence of 
the masses, how can he expect such a situation to continue? 
Every year, yes, every day, it becomes clearer and clearer that 
such a condition w T ill no longer be tolerated and must speedily 
pass away. Would it not be better for him to use some intelli- 
gent foresight and meet what clearly are to be the immediate 
future demands of public opinion? 



PROBLEMS OF LABOR 119 

As for the man who is making large profits but who objects 
to profit sharing on the ground that he wants to put those profits 
away against the day when business may be poor, to such a man, 
I say that he had better use some of those profits to more 
deeply interest his men in his business, and to do this to such 
an extent that if the dark days come he can be pretty certain 
that his men will stand by the business in a way that capital 
alone never can. 

Obviating Difficulties 

Profit sharing on the basis I favor is also sometimes objected 
to by concerns whose securities are closely held. There are 
many ways to obviate this difficulty. Some concerns can in- 
crease their capital. Others that cannot, or that cannot do so 
for a time, can obviate the difficulty by issuing certificates of 
participation that will draw the same percentage of profit as 
the regular securities of the business. In other words, where 
there is a genuine desire to share profits a way can always be 
found. 

The day of secretive methods is passing rapidly. The day 
of publicity is at hand. The change is a perfectly natural evolu- 
tion due to broader education and improved intercommunication 
and has also come about because it is second nature to be less 
suspicious and afraid of that which is known than of that 
which is unknown. Any profit-sharing plan without an open, 
honest balance sheet and detailed annual report will never 
succeed. 

I am convinced that labor is entirely willing that capital 
should have its fair reward and proper protection, but in this 
country we have had too many instances where capital has de- 
manded improper protection and taken exorbitant reward; and 
one of the main reasons why the serious problems confronting 
us today are so difficult of solution lies in the fact that too 
many men of capital are still arrogant and unreasonable, and 
absolutely unwilling to look with sufficient care and fairness 
into the causes that are producing the views and opinions so 
largely held by our own people at this time. On the other hand, 
one of the most serious drawbacks to increased output and eco- 
nomical production is the listless, indifferent service rendered 
by a large percentage of employes. Making partners of em- 
ployes, through profit-sharing, would correct this as nothing else 
could. 



120 SELECTED ARTICLES 

Profit Sharing a Success 

Some companies with which I am connected have realized 
the trend of the times and have for some time been practicing 
profit-sharing along the lines I have indicated. They believed 
that profit-sharing plans based on such principles would so knit 
their vast organizations together, and would so strengthen and 
develop the esprit de corps, as to make it possible for the com- 
panies to increase their business and their earnings ; and they 
were willing to share this increased success with their em- 
ployes. So far they have every reason to congratulate them- 
selves on the results. 

In all parts of their business, at home and abroad, in the 
office force, in the factories, in the sales department, every- 
where, the individual employe's interest in the business is much 
greater than formerly. The saving in waste everywhere is 
noticeable. The employes are vieing with one another more 
and more to improve their respective and other branches of the 
business. All this means success for the company, profits for 
the stockholders, extra compensation for the employes. It 
means getting men on salaries and wages to have a live, keen 
interest in the management of the business. It means getting an 
organization of men to work as real partners. It means recog- 
nizing the right of the employe to a fairer share of the earnings 
of the business in which he is engaged. In short, it means co- 
operation that is complete, in that it benefits stockholder, em- 
ployer and employe. 

While all this can more readily be accomplished in a large 
business, it can also be successfully accomplished in a small 
business if approached in the proper spirit; and if applied gen- 
erally it would remove to a considerable degree the dangers that 
are menacing modern industry, and which are largely caused by 
the feeling on the part of the masses that, through wages, they 
are not getting their proper proportion of the money earned in 
a given industry. 

WHY I BELIEVE IN PROFIT SHARING 1 

Boris Emmet in the August Review of the Department of 
Labor makes a strong case against profit sharing as a solu- 
tion of the labor problem. It seems now clear that to look upon 

1 By Henry S. Dennison, President and Treasurer, Dennison Mfg. Co. 
Factory. 20:424. March, 1918. 



PROBLEMS OF LABOR 121 

profit sharing as any such panacea is a serious mistake, harmful 
alike to any real study of the labor or the profits problem. But 
because profit sharing does not solve the labor problem is no 
earthly reason why its possibilities in other directions should 
not be thoroughly searched out. 

There are very definite chances for improvement in the 
customary distribution of profits. Any case of unearned or 
undeserved income, or of unrewarded successful effort, must 
have actual effect in lowering the worth and efficiency of the 
social structure, the life of which must more and more depend 
upon the fitting of reward to desert — of the punishment to the 
crime. 

Picture a corporation led and managed by salaried men, sales 
managers, financial men, purchasing agent, factory manager — 
who hold no stock in the company, or at best only the one share 
each necessary for directors. Say, now, that it pays a goodly 
dividend rate, perhaps twenty percent, enough anyhow to repay 
amply all original and present risks ; that it pays the full going 
rate of wages and salaries; and is prompt and liberal with sup- 
pliers and customers. If through the energy and insight of its 
managers it earns more than a net twenty percent, to whom 
should the excess go? 

On the grounds simply of sound economic structure — for 
the purpose of maintaining and improving business and indus- 
trial efficiency, it would seem beyond question that it ought to 
go to the managing group. Sometimes part of it does, in the 
form of increases in salaries ; but our question then applies to 
the part which doesn't. 

Most often only a small portion of such excess goes to the 
managing group, the major part frequently being passed to 
stockholders without any question of desert, and thus adding to 
the unearned increment, which is already quite full enough of 
difficulties and of possibilities harmful to sound industrial 
progress. 

To the recipient the baleful effects of this unearned income 
may be increased by the consequent rise in the sale value of 
his stock; to the managing group the perfectly apparent in- 
congruity has more and more deadening effect as the oppor- 
tunities for independent undertakings grow fewer in our aging 
country. 

The conservative individual bases his social philosophy 
firmly upon the assumption that men will not do the work which 
must be done to keep the race alive, without an assured reward 



122 SELECTED ARTICLES 

as a stimulus, or unless the results of their efforts can be as- 
sured to them. History and present observation give strong 
basis for this assumption, which can be denied only by shifting 
to grounds of hope and faith; and an important, but an often 
overlooked corollary to this is that rewards unearned by effort 
cannot exist without weakening the will to work of the recipi- 
ent. Profits given to capital in excess of the amount it could 
have been bought for injure the whole social structure through 
him who gives and him who takes. 

If any part of earnings in excess of a fair return for the 
use and risk of capital goes to stockholders merely because they 
are stockholders, and if any part of the managing group goes 
without a share of such surplus earnings, the situation • is a 
dangerous and harmful one, which should challenge the atten- 
tion of any man who believes in the necessity of an appropriate 
reward to stimulate enterprise. 

Most of our corporations are subject to this criticism though 
the facts are usually concealed by some degree of stockholding 
among the managers, and by the absence of the data upon which 
the fair return to capital can be figured. But they should look 
into their own conditions with care and frankness; and, as a 
matter of public policy, the formation of new corporations upon 
the old lines should be made difficult. 

A discussion of the question of control would follow almost 
exactly the same course as the above discussion of the surplus : 
an unearned, an undeserved control is harmful to him who 
exercises it and to those over whom it is exercised. A strong 
case can be made for the claim that absentee control is a more 
damaging social influence than unearned income. Doing away 
with the qualifications of residence and literacy which limit the 
political electorate would not meet with the favor of those who 
believe we need rather more intelligence than less in voting. 

Absentee or unearned control is also most often partially 
concealed in the modern corporation. Only a minority may be 
held by outsiders ; or proxies may habitually give the control to 
some one of the managers; or a directorate skilled in manage- 
ment may seem wholly free of stockholders' interference; how- 
ever smoothly things may work along for the time being, in the 
long run the real control will have its inevitable influence, 
conscious or unconscious, upon all workers. 

To these two objects — the distribution of surplus more 
nearly in accord with desert, and the prevention of untrained 



PROBLEMS OF LABOR 123 

or absentee control — the studies of profit sharing can wisely be 
directed. While no final solution of the difficulties is possible, 
still constant progress must be made; and the assignment of 
profits with no regard for desert, or of voting rights without 
regard for ability works against the satisfaction of the worker 
and the manufacturing efficiency of the management. 

Studies in the field of industrial relations can well be con- 
fined to bettering the conformity of wage to effort and to worth ; 
to increasing the opportunities of the employees to express their 
ideas as to all conditions of their work; and to the establish- 
ment of a social relation worthy of the name between manager 
and worker. If profit-sharing studies are confined to the logics 
of control and of surplus earnings, a great contribution toward 
social advance may be made before long. 



ROAD TOWARD INDUSTRIAL PEACE 1 

A Changed Attitude Since 1914 on the Part of Both 

Employers and Employes Opens the Way to 

Experiments in Profit Sharing 

There is no doubt that the attitude of the great majority of 
employers toward the labor question has undergone a great 
change since August, 1914. Many of the conservative, old- 
fashioned employers are seriously alarmed and much perplexed, 
and are inquiring as to the means of remedying the present con- 
fusions and disastrous tendencies. Thousands of employers are 
trying to apply in their own works or factories new methods of 
administration which will make their employes healthier, more 
comfortable, and more disposed to work with hearty good-will 
for the success of the particular industries in which they are 
engaged, because they themselves profit by that success. A very 
large number of employers and employes alike are beginning to 
realize that nothing can cure the present crushing ills of the 
civilized world except abundant production by all the peoples ; 
that high wages have no tendency to cure the existing evils, but 
on the contrary increase them, because they raise the costs of 
production without increasing production; that the scales of 
wages on which the health, happiness, and capacity for progress 
of the human race depend are badly adjusted to each other, so 

1 By Charles W. Eliot from an article in New York Times. Sep- 
tember 21, 1919. 



i2 4 SELECTED ARTICLES 

that the results to the community are unjust and often highly 
inexpedient. Thus, for example, it is inexpedient and even ab- 
surd that a locomotive engineer should earn more than the Prin- 
cipal of a high school ; or that a young woman of 22 sewing 
uppers in a well-managed shoe factory should earn two or three 
times as much as the young woman who is teaching school in 
the same town; or that an indifferent carpenter or plumber 
should be paid more than a highly trained and experienced civil 
engineer, or an ordinary mason more than a competent clerk 
in a good retail store. 

On the side of labor significant changes of mind are also 
visible. While the ignorant masses of laborers are still believing 
that the only available way to advance the interests of their 
class is to fight for them with any degree of violence that may 
be needed for immediate success, no matter what sufferings they 
inflict on the community at large, the most intelligent of their 
leaders are beginning to see that that way leads to nothing ex- 
cept a common ruin; and these leaders are also anxious lest 
the masses abandon their own elected chiefs. They feel that 
the rank and file of the labor unions are getting out of control 
and are following irresponsible agitators rather than their re- 
sponsible officers. They recognize that there is no solution of 
the industrial troubles to be found by running round the circle- 
high wages, higher costs; high costs, higher wages. In short. 
the best road to industrial peace runs toward the increasing of 
good-will in all productive work; because it is plain that ill-will 
diminishes production, whereas good-will is capable of enhanc- 
ing production to an unimaginable degree. The angel's song 
when Christ was born, as given in the revised version, is the 
soundest economic and political doctrine which the staggering, 
plunging, bewildered modern world has as yet had a chance to 
listen to — ''Peace on earth to men of good-will.*' 

Xow is the time. then, to discuss and experiment with profit- 
sharing. The arguments for and against profit-sharing take a 
wide range ; and so do the experiments which are actually under 
way. Many of the experiments are so ill-devised that they in- 
evitably fail ; and, on the other hand, some of those that suc- 
ceed prove such valuable assets that their devisers conceal the 
nature and results of their experiments, lest their competitors 
imitate them. There is obviously no such thing as one best and 
uniformly applicable scheme of profit-sharing. Every individual 
factory should have its own scheme adapted to its own nature, 



PROBLEMS OF LABOR . 125 

history, and surroundings; and so should every separate plant 
of a corporation or firm which maintains many scattered plants. 

Then, there are many industries to which profit-sharing can- 
not be applied at all, just as there are many to which the eight- 
hour day cannot be successfully applied, unless it be treated as 
merely an acceptable plan for raising wages. The eight-hour 
day with its provisions about extra pay for overtime cannot be 
used successfully in a highly seasonal industry, like canning 
vegetables and fruits, or in an industry which inevitably has 
spasms of great activity followed by periods of comparative 
quiet, like canning herring, or publishing a magazine. Profit- 
sharing is, of course, not applicable to any occupation which is 
not conducted for a profit, like the services of charitable, edu- 
cational, and religious corporations, or domestic service, or Gov- 
ernment service of any sort, or the service of any corporation 
conducting a novel, experimental, or adventurous business in 
which there is large risk of either temporary or ultimate failure. 

Recent action by the four railroad brotherhoods seems to 
indicate that labor has not yet apprehended the fact that no 
Government undertakings — national, State, or municipal — are 
conducted for a profit, or should be. The present confused situ- 
ation would be clarified and improved by new legislation de- 
claring that strikes and threats to strike are inadmissible in all 
Government services and all public utilities; but neither of the 
present political parties seems capable of carrying through such 
legislation. Possibly some new political combination may arise 
to frame and adopt it. The almost unanimous rally of public 
opinion against the desertion of their duty by the Boston police- 
men is hopeful in this direction. The popular objection to such 
desertion of duty applies with equal force to firemen, the engi- 
neers who pump the water supply for a large urban population, 
and the men who maintain the great transportation services on 
land, and with almost equal force to the men who maintain 
transportation by sea. 

Through the smoke and din of the present combat it already 
appears to many disinterested lookers-on that profit-sharing, 
combined with co-operative management, in which the employes 
take active and responsible part, with co-operative care of the 
health, education, and happiness of employes, and with full 
knowledge by the employes of the employer's accounts, is the 
only road to industrial peace. The great private machinery in- 
dustries, including transportation on land and sea, constitute 



126 SELECTED ARTICLES 

the best field for profit-sharing; and it is in this field that per- 
sistent experimentation is most to be desired. 

The objections to profit-sharing are both theoretical and 
practical ; and among the theoretical a leading one is the not un- 
common apprehension on the part of owners, managers, and 
their counsel that if it be admitted in practice that the working 
people in a mill, machine shop, railroad, or mine are entitled to 
a share in the profits, the profitsharers will shortly claim that 
they are entitled to all the profits. This apprehension cannot 
be supported by observation of actual occurrences or by prac- 
tical experience of profit-sharing schemes ; because it is impos- 
sible to point to any fair and sensible profit-sharing scheme 
which has produced that effect on the minds of the workmen. 
Nevertheless, it is a formidable obstacle to experimentation on 
profit-sharing. Since it is not based on actual experience it 
ought not to prevent stable corporations or partnerships from 
trying rational experiments. On the other hand, it is difficult 
to corroborate by results of actual experience the theoretical 
argument in favor of profit-sharing that it will produce so 
great an increase of production as to be highly profitable to 
both capital and labor; because the practical demonstration in- 
volves a publicity of accounts which is very disquieting to most 
managers and owners, and the revelation to competitors of 
something which both employers and employes quickly come 
to regard as an asset which it is for their interest to conceal. 

The advent to American factories of many thousands of 
ignorant aliens who can neither speak nor read English is, of 
course, a serious obstacle to the introduction of sound profit- 
sharing schemes, since they all require intelligence and some 
knowledge in the participants. The only remedy for this 
troublesome condition is education for both children and adults 
— a slow-working remedy. 

Another difficulty which is serious, though perhaps tempor- 
ary, is the nomadic habit of labor, which has been brought 
about, or at least greatly increased, by the war. The rapid 
"overturn" of the labor which many American employers have 
experienced of late is one of the worst symptoms of the times. 
Profit-sharing requires stability in the operative and mechanic 
classes, and when accompanied by good housing and good sani- 
tation strongly promotes stability. 

Another obstacle to the introduction of profit-sharing into 
modern industry is the opinion which still lingers in the manu- 



PROBLEMS OF LABOR 127 

facturing, though fading from the political or Governmental 
field, that autocracy is more efficient than democracy — a few 
managers, indeed, maintaining that autocratic management is 
indispensable. One of the aims of the reformers of industrial 
methods is often described as the introduction of democracy into 
business. The use of this phrase incites to opposition a con- 
siderable number of successful business men and managers of 
corporations who believe that active industries, like aggressive 
campaigns in war, must be really conducted by single autocratic 
executives of superior intelligence and will-power and prophetic 
insight. 

On this subject the great war has taught important lessons. 
It has taught that in the fields of commercial and industrial ac- 
tivity which support modern military and naval operations ex- 
perienced experts are the only men who should be given control. 
These men have been trained through actual experience in the 
various industries or trades with which they were connected, 
and have therein proved their competency. The Washington 
Administration and the State administrations apparently thought 
at the beginning of the war that the same rule would apply in 
the army and navy, and accordingly chose most of their advisers 
and commanders from the regular army and navy of the United 
States and a few from the State National Guards. As these 
sources shortly proved to be inadequate, the National Adminis- 
tration, so soon as it attempted to raise a large army by draft, 
was compelled to extemporize its officers, that is, to select and 
train them by hasty methods. The great majority of these offi- 
cers came straight from civil life, and were without military 
experience. Great Britain was obliged to do the same thing in 
order to get Kitchener's mob promptly into the field. None of 
the armies opposed to Germany had had any experience of the 
kind of war that Germany proposed to make and had deliber- 
ately prepared for during a whole generation. Germany's meth- 
ods were novel in important respects, and the armies of the na- 
tions opposed to Germany all had to learn how to deal with 
the new German methods and implements of warfare. They 
had to learn how to make and how to use high explosives, gas 
shells and clouds, bombing airplanes and submarines. They had 
to learn how to deal with the German policies of wholesale loot- 
ing, depopulation, and devastation on land, and traceless sink- 
ing at sea. Now, it is an intensely interesting fact that Great 
Britain and the United States were very quick to extemporize 



128 SELECTED ARTICLES 

armies which without long and elaborate preparation could fight 
at least as well as any armies have ever fought, and before long 
better than the German armies which had had a preparation ex- 
tending over a whole generation of men subject politically to 
a despotism, and in their military training to an autocratic mili- 
tary class. These extemporized armies were essentially citizens' 
armies, composed of citizens of democratic States. 

In both these States the industries in support of the war 
had to be suddenly created or greatly enlarged out of the com- 
mon mass of free citizens ; and here, again, the freemen proved 
to be superior as to amount and quality of product to the Ger- 
mans and Austrians, who had grown up under an autocratic 
regime. The explanation of: these military and industrial 
phenomena is that men and women accustomed to the theory 
and practice of liberty possess, and will exhibit on occasion, 
more initiative, will power, and spontaneous energy than men 
and women brought up under despotisms. Men of intelligence 
and resolution can become expert in war services in a few 
months, if they are accustomed to act on the motives which 
inspire free men. 

This war experience applies with great force to the conduct 
of the great industries of a free people The industrial democ- 
racy must select and employ competent leaders, who can organ- 
ize and maintain a high degree of co-operative discipline ; and 
since leadership in long established industries requires much 
more knowledge and skill than leadership in military and naval 
operations except in the very highest posts, industrial leaders 
will require more knowledge and longer training than military 
leaders need; and the industrial democracy will have to select 
its leaders with great care, and stand by thern with impregnable 
loyalty. But these leaders should not be autocrats, and the or- 
ganization of the great industries should not bear the least re- 
semblance to autocratic or military organization, except as both 
require promptness, co-ordination, and an understanding of the 
common object. The industrial manager of the future is to be 
a man of knowledge, skill, imagination, good-will, and personal 
power. This is the kind of man that the introduction of democ- 
racy into all business may be expected to produce and bring to 
leadership. In support of these views all freemen may be asked 
to take notice that the proceedings of the British Parliament 
and the Congress of the United States and of the administra- 
tions of those two democracies during the war show that po- 



PROBLEMS OF LABOR 129 

litical democracies will adopt temporarily any amount of auto- 
cratic method which may seem to them necessary to the accom- 
plishment of the immediate ends they have in view. The same 
tendency appeared in the management of the war industries. 

Prudent advocates of profit-sharing never represent the 
method as applicable in all industries, or as the single cure-all 
for the industrial strife. They maintain that profit-sharing 
must always be associated with co-operative management, that 
is, with the effective sharing by the working people in the man- 
agement and discipline of the works or shops, and also with 
complete accessibility of the accounts of the establishment for 
the elected representatives of the workers, whether members of 
the company's Board of Directors or merely auditors satisfac- 
tory to the employes. In other words, profit-sharing should be 
onry one element in a scheme having three parts. The object to 
be attained in any hopeful reorganization of the machinery in- 
dustries is a generous sharing of control and responsibility, and 
therefore of profits, when there are any, after wages and interest 
on borrowed money have been paid. Nothing short of that 
will give satisfaction to both parties in the present industrial 
strife, and nothing else ought to. To take together a long step 
on the road toward lasting peace employers and employes must 
be really partners, with like motives for diligence, the preven- 
tion of wastes, and the adoption of improvements. 

Some business men, who are familiar with the legal and com- 
mercial definition of a partner as a person who has agreed to 
divide with specified associates both the losses and the profits 
of their common business, and is competent to bear his share 
of the losses, have no use for the suggested partnership between 
capital and labor, because labor obviously cannot bear any part 
of losses. Labor certainly cannot. Its wages have been paid in 
advance by capital, and have been mostly spent for subsistancc 
before profits or losses have been declared for the period 
covered by the wages. Nevertheless, sharing profits with capital, 
when there are profits, is a practice of high value as incentive to 
zealous and accurate work and to constant care of raw materials, 
tools, machinery, and finished product. This incomplete kind 
of partnership has, therefore, strong good effects. 

In the United States certain policies already adopted in the 
hope of improving industrial conditions tend to prevent the 
adoption on a large scale of genuine profit-sharing or copartner- 
ship. These are the minimum wage, the "basic" day, and the 



i 3 o SELECTED ARTICLES 

standard week policies, and in general the tendency to desire 
or demand uniform regulations for the infinite variety of indus- 
tries which exist in a country presenting great diversities of 
soil, climate, racial and traditional conditions, and food and 
drink habits. Variety, flexibility, and mobility in industral regu- 
lation should be the aim, not uniformity and stiffness. 

Another serious difficulty in introducing real copartnership 
is the failure of a large portion of the public to realize that new 
capital is incessantly needed in any business which is to expand 
or grow, or even to maintain its efficiency. Hence, to impede or 
prevent the steady flow of new capital into a factory industry 
is to destroy it. Moreover, a fair return for capital in a long- 
established and steady industry producing staple commodities 
is a very different thing from a fair return for capital in a new 
and adventurous industry, or in an industry which produces 
articles whose market value depends on fashion, social whims, 
extravagant advertising, the ups and downs in respect to pros- 
perity of different classes in the community, or changes in the 
pleasures, games, or sports of the populace. A strong argu- 
ment in favor of opening an employer's accounts to his employes 
is that through knowledge of the accounts employes gradually 
learn that new capital is frequently needed, and that in most 
businesses money has to be borrowed at some peak of the busi- 
ness ; so that the employer must have credit at the places where 
money can be borrowed. A curious illustration of this point 
came to light this Summer in a canning establishment in the 
Middle West, which has a strong peak lasting from three to 
four months. The business is really managed by a mixed com- 
mittee containing manager, directors, and foremen or heads of 
departments, all of whom are profit-sharers. The company is 
new, and has no credit as such, the borrowing power lying with 
the manager. Knowing that a considerable sum of money would 
have to be borrowed in order to carry on the business during the 
peak, the managing committee insisted that the life 1 of the man- 
ager should be insured for an amount which would cover the 
habitual borrowings for the peak. The managing committee 
took this action because it wanted to be sure of the money neces- 
sary to carry on the business, in case the manager should die 
before or during the peak. These profit-sharers had learned in 
a few months much about the proper co-operation between 
capital and labor, although the plan of profit-sharing under 
which they were working was a defective one. 



PROBLEMS OF LABOR 131 

On one point there is the utmost diversity of opinion among 
advocates of profit-sharing, namely, on the expediency of the 
workers' acquiring shares in the capital stock of the corporation 
which employs them. The British Labor Copartnership Asso- 
ciation advocates the systematic acquirement of share capital 
by the workers as the principal method of profit-sharing. In- 
deed, the British association argues against the payment of any 
cash dividend to payroll. In the United States several large 
corporations have offered their employes strong pecuniary in- 
ducements to put their savings into the stock of the employing 
companies. There are obviously serious objections to profit- 
sharing by compulsory or urged purchase of shares in the em- 
ploying company's stock. In the first place, the method is 
chiefly applicable to the higher-paid employes, like heads of de- 
partments, foremen, salesman, and clerks. Secondly, if the 
employing company urges its working people to put their savings 
into its stock, or tries to induce them to do so, it takes the re- 
sponsibility for the effects of heavy falls in the market price 
of its stock, which are sure to be resented by those of its em- 
ployes who have invested therein. Thirdly, the method violates 
the commonest rule of judicious investors, namely, the rule 
against putting all one's eggs into one basket. It is not obvious 
that the limited control over the management of a business 
which can be exercised by the moderate proportion of the work- 
ing people in any plant that can become share holders to a small 
or even a large extent in the employing company will be only 
a short step toward industrial peace? 

On both sides of the profit-sharing discussion it is essential 
to be cautious in arguing from the success or failure of single 
instances of applied profit-sharing. The instance most relied on 
by advocates of a thorough co-partnership between capital and 
labor is that of the thirty-eight joint stock gas companies of 
Great Britain, with combined capital of $270,000,000; because it 
has been in operation for thirty years, and has withstood many 
serious difficulties, including a great strike, the continuous oppo- 
sition of organized labor, broad fluctuations in the prices of coal 
and of the by-products of the gas-rnaking process and the fric- 
tions of the great war. Yet the workers' share of profit in these 
great companies' is put into the capital of the business and not 
paid in cash. 

The experience of London with its gas companies is thus 
stated by the British Labor Copartnership Association: 



i 3 2 SELECTED ARTICLES 

"In London, of the eleven gas companies six practice co- 
partnership; but these six have forty times as much capital and 
produce thirty-four times as much gas as the other five, and 
all sell it at a cheaper rate." 

Nevertheless, in these companies both co-operative manage- 
ment and profit-sharing are far from complete. 

In the United States there are numerous examples of suc- 
cessful co-operative management and profit sharing based on in- 
ducing the workers to take up shares in the stock of the com- 
pany. One corporation conducting a highly seasonal industry 
divides net profits equally between shareholders and the profit- 
sharing payroll, but pays the dividend to pa}^roll only in stock, 
the company promising to buy on demand from any employe his 
stock at par, and all the profit-sharers promising that they will 
sell their shares back to the company at par if they leave the 
service. This is certainly an ingenious modification of the ordi- 
nary dividend to payroll in stock; but the company's experience 
with it is too short and its business too peculiar to permit any 
safe inference as to its applicability in general. In this company 
profit-sharing and co-operative management are alike limited to 
employes who are all-the-year-round workers ; and these work- 
ers are paid weekly wages whether they are sick or well, and 
whether business is brisk or slack, and they expect to work long 
hours during the peak of the business, and receive no additional 
pay for overtime. There are also interesting examples of giving 
consumers a share in the profits of the concerns from which they 
buy, and many examples of co-operative buying and selling by 
neighborhoods. But the methods emplo3^ed to secure profit-shar- 
ing have often been ill-devised, and the results in successful 
cases have, as a rule, not been published. 

Any kind of profit-sharing will succeed which appeals to the 
fundamental motives that have for man}* centuries past induced 
men, rising out of barbarism, to be industrious and frugal, and 
to keep their promises and contracts. These motives are love 
of home and its surroundings, and of parents and brothers and 
sisters in the first home and of wife and children in the second, 
the desire to have steady employment and to accumulate prop- 
erty for the sake of home and descendants, and the hope of 
freedom from the dread of disabling sickness or accident, pre- 
mature death, and a forlorn old age. Free Governments give 
these motives play, and a democratic administration of business 
will do the same. Genuine partnership between labor and cap- 



PROBLEMS OF LABOR 133 

ital will develop and satisfy these motive powers in both the 
partners, because every good profit-sharing scheme turns out to 
be for the advantage of both parties. War — especially the mod- 
ern German kind of war — suspends the action of all these mo- 
tives, besides killing and disabling multitudes of young men, 
imparing the vitality of millions of old men, women, and chil- 
dren, and wiping off the face of the earth thousands of beloved 
family homes. To prevent the recurrence of such destruction 
thousands of young Americans laid down their lives. Is fierce 
industrial war to succeed within each nation to the international 
war just closed? Is the impoverishment of all the nations to 
continue and increase? Are hate, jealousy, and anger to govern 
the conduct of the nations, or of different classes within the 
same nation? The good sense and good feeling of the Amer- 
ican people at large can prevent these fatal calamities if capital 
and labor will establish friendly co-operative relations, and ex- 
periment together on the best way to feed, clothe, warm, and 
house the world in comfort. The road to industrial peace is 
the road to good-will among all classes and conditions of men, 
and there is no other worth traveling at all. 



THE PROFIT-SHARING FALLACY 1 

Profit-sharing is an attempt to throw the workers off the 
track that leads to victory. 

Labor and capital, it is claimed by those who advocate it, 
should end their conflict by entering into partnership and shar- 
ing profits on a definite basis of division. 

If the workers were to accept this seemingly generous pro- 
posal, they would find their last case worse than their first. 

Speeding up would inevitably result in the effort to augu- 
ment their share by increasing profits. And there would be 
a tendency to connive at high prices, with the same end in view. 

The total effect would be most damaging to the interests of 
the working class. They would produce more and get less. 
Their labor would become intensified, while their purchasing 
power would decline. 

The workers would do the speeding up, for capital as such 
is incapable of exertion. The workers would pay the high 
prices, for capital as such, is not a consumer. 

1 From International Steam Engineer. (This article represent! the point 
of view of organized labor — Ed.) 



134 SELECTED ARTICLES 

Instead of improving their economic condition by profit- 
sharing, any general adoption of the scheme would lower the 
status of the workers and confirm their servitude. 

There is another aspect of the matter, and a vitally important 
one. Profit-sharing would destroy unionism. 

The interests of the workers would be split up and divided 
among unrelated commercial enterprises, many of them in actual 
competition with one another. No longer would they be bound 
together for the redress of wrongs suffered in common and the 
assertion of rights demanded in common. 

They would be rivals in business and all their hopes would 
center on pushing the particular concern with which they were 
associated, thus rendering vastly more difficult any united pur- 
pose. 

Unionism would disappear, and with unionism the most 
powerful factor making for the progress of the race. 

This is a feature of profit sharing that will commend it to 
capitalists, because the progress of the race means the elimi- 
nation of their class dominance and the establishment of an in- 
dustrial commonwealth in which they would have no function 
to perform. 

But it would be disastrous for the workers, riveting upon 
them the chains of slavery and stripping them of their historic 
mission of carrying on the evolution of society and, by liberating 
themselves, setting free mankind. 

A big Australian firm recently announced its intention of put- 
ting its employes on a profit-sharing footing, its managing direc- 
tor declaring that in this method lay the solution of the indus- 
trial problem. 

That many other firms will follow suit, when the labor situ- 
ation will be pregnant with revolutionary possibilities, there can 
be little doubt. 

The workers must be on their guard against this cunning and 
plausible confidence trick. Nothing is for their good that dis- 
perses their interests in a thousand different directions, instead 
of concentrating them on one desired goal. 

The industrial problem will never be solved till capital 
ceases to be regarded as an active participant in production, 
rightly demanding profits, and becomes what it really is, a mere 
instrument in the hands of labor, no more entitled to dividends 
than a pick or a shovel. 



PROBLEMS OF LABOR 135 

(c) Minimum Wage 

THE ECONOMIC THEORY OF A LEGAL 
MINIMUM WAGE 1 

The fixing of a minimum wage by law — making it a penal 
offense to hire labor at a lower rate than that fixed by the law 
— is now an accomplished fact, of which the world has had half 
a generation of experience. In this matter of the legal mini- 
mum wage the sixteen years' actual trial by Victoria is full of 
instruction. Victoria, which is a highly developed industrial 
state, of great and growing prosperity, had long had factory 
laws, much after the English fashion. In 1896, largely out of 
humanitarian feeling for five specially "sweated" trades, pro- 
vision was made for the enforcement in those trades of a legal 
minimum wage. Naturally this was opposed by all the argu- 
ments with which we are familiar — that it was "against the laws 
of political economy," that it would cause the most hardly 
pressed businesses to shut down, that it would restrict employ- 
ment, that it would drive away capital, that it would be cruel to 
the aged worker and the poor widow, that it could not be car- 
ried out in practice, and so on and so forth. Naturally, too, all 
sorts of criticisms have since been leveled at the administration 
and working of the law ; and over and over again eager oppon- 
ents, both in England and on the spot, have hastened to report 
that it had broken down. But what has been the result? In the 
five sweated trades to which the law was first applied sixteen 
years ago, wages have gone up from 12 to 35 per cent, the hours 
of labor have invariably been reduced, and the actual number 
of persons employed, far from falling, has in all cases, rela- 
tively to the total population, greatly increased. Thus the legal 
minimum wage does not necessarily spell ruin, either for the 
employers or for the operatives. But, of course, it is open to 
any theorist to urge that we do not knew how much better off 
these trades might have been without the act. The only test 
here is what the people say who are directly concerned, who see 
with their own eyes the law actually at work, and who are 
forced daily to compare the trades to which it applies with those 
to which it does not apply. First let us notice that the act of 
1896 (like the British Trade Boards Act of 1909) was only a 

1 By Sidney Webb. Journal of Political Economy. December, 19 12. 



136 SELECTED ARTICLES. 

temporary one. It has during the past sixteen years been in- 
cessantly discussed ; it has been over and over again made the 
subject of special inquiry; it has been repeatedly considered by 
the Legislature ; and, as a result, it has been five successive 
times renewed by consent of both Houses. Can it be that all 
this is a mistake? Still more convincing, however, are the con- 
tinuous demands from the other trades, as they witnessed the 
actual results of the legal minimum wage where it was in force, 
to be brought under the same law. 

Provision is made for this extension by resolutions which 
have to be passed by both Houses of the Legislature. The first 
trades to which the law was applied were those of bootmaking 
and baking (employing mainly men), clothing, shirts and under- 
clothing (employing mainly women), and the very troublesome 
furniture trade, in which the Chinese had gained a secure foot- 
ing. It naturally took some time to get the law to Avork, to 
overcome the inevitable difficulties and to demonstrate any re- 
sults. Accordingly for four years there was no extension. In 
1900, however, we had the brickmakers coming in, and the 
butchers, the cigar makers and the confectioners, the coopers 
and the engravers, the fellmongers, the jewelers, and the jam 
trade, the makers of millet brooms and the pastry cooks, the 
plateglass manufacturers and the potters, the saddlers and the 
tanners, the tinsmiths and the woodworkers, the woolen manu- 
facturers and, perhaps the most significant of all, the strongly 
organized printers, including the compositors in the great news- 
paper offices. In the following year (1901), so far from there 
being any signs of repentance, there was an equal rush of exten- 
sions of the law to industries of all kinds — the aerated water 
makers and the manufacturers of artificial manure, the brass 
workers and the bedstead makers, the brewers and the brush 
workers, the iron moulders and the makers of leather goods. 
the maltsters and the oven makers, the stonecutters and the 
workers in wicker. For three years there was then a pause, 
the legal minimum wage being only demanded by and extended 
to the dressmakers in 1903. In 1906 came another rush of 
trades, the agricultural implement makers, the cardboard box 
makers, the candle makers, the cycle trade, the farriers and the 
flour millers, the milliners and the paper bag makers, the manu- 
facturers of starch, soap and soda, and the makers of water- 
proof clothing. In the following year (1907) only the glass- 
workers and the picture frame makers came in. The year 1908 



PROBLEMS OF LABOR 137 

saw the application of the law to the bread carters, the hair- 
dressers, the manufacturers of ice and the wireworkers. In 
1909 it was extended to the carpenters, the carriage builders, the 
carters, the drapers, the electroplaters, the grocers, the ham and 
bacon curers, the dealers in coal, wood, hay and chaff, the mak- 
ers of men's clothing, the organ builders, the painters, the man- 
ufacturers of polish, the plumbers, the quarrymen, the makers 
of rubber goods, and that mysterious craft the tuckpcinters. 
During 1910 there came in the boiler makers, the boot makers, 
the bricklayers, the coal miners, the electrical engineers, the 
factory and mining engine drivers, the gold miners, the hard- 
ware makers and the hotel employees, the marine-store dealers, 
the plasterers, the stationers, the teapackers, the tilers, the 
watchmakers, the slaughterers for export, the undertakers and 
even the lift attendants. What occupations were left to come 
in during 191 1 and 1912 I do not yet know. 

Now, in this remarkable popular demonstration of the suc- 
cess of the act, tested by the not inconsiderable period of six- 
teen years, extending over years of relative trade depression as 
well as over years of boom, some features deserve mention. 
First, the extension have frequently — indeed, it may be said 
usually — taken place at the request, or with the willing acquies- 
cence, of the employers in a trade, as well as of the wage earn- 
ers. What the employers appreciate is, as they have themselves 
told me, the very fact that the minimum wage is fixed by law 
and therefore really forced on all employers : the security that 
the act accordingly gives them against being undercut by the 
dishonest or disloyal competitors, who simply will not (in Vic- 
toria as in the port of London) adhere to the common rules 
agreed upon by collective bargaining. We must notice, too, that 
the application of the law has been demanded by skilled trades 
as well as by unskilled, by men as well as by women, by highly 
paid craftsmen and by sweated workers, by the strongly organ- 
ized trades as well as by those having no unions at all. One 
is tempted, indeed, to believe that little remains now outside its 
scope except the agricultural occupations and domestic service! 
Nor can it be said to be confined to industries enjoying a pro- 
tective tariff, for there are no import duties to shield the gold 
miners, or the quarrymen, or the slaughterers for export; and 
no fiscal protection helps for carters or the butchers, the drap- 
ers' assistants or the engine drivers, the newspaper printers or 
the potters, the grocers or the hairdressers, the hotel employees 



138 SELECTED ARTICLES 

or the lift attendants. And it is difficult to believe that the en- 
forcement of a legal minimum wage in all these hundred differ- 
ent industries, employing 11,000 persons (being, with their fami- 
lies, more than a quarter of the entire population of the state), 
has interfered with the profitableness of industry, when the 
number of factories has increased, in the sixteen years, by no 
less than 60 per cent, and the numbers of workers in them have 
more than doubled. Certainly, no statesman, no economist, no 
political party nor any responsible newspaper of Victoria, how- 
ever much a critic of details, ever dreams now of undoing the 
minimum wage law itself. 



HOURS OF WORK 
(a) The Shorter Work-Day 

THE EIGHT-HOUR DAY 1 

The question as to the length of the working day is before 
the manufacturer and the public as never before, and in such 
strength that it demands a solution. Labor wants eight hours, 
but unfortunately many employers cannot see that their best 
interests will be served by operating their plants on an eight- 
hour basis. Some wise employers adopted the eight-hour day 
long ago of their own accord ; others were forced to the decision 
by the demands of labor ; while still others are resisting and 
stoutly maintaining a longer day. 

Those who are working a ten-hour day seem able to sec 
in the eight-hour plan only increased costs, both as to labor 
and burden charges. They seem to overlook the fact entirely 
that the work accomplished and not time spent in the shop is 
the factor which determines costs. 

The case of one manufacturer, which is typical of many, may 
be cited. His plant was operating on a ten-hour basis; he was 
shown conclusively that the employees were not working over 
eight hours, that they started late, quit early, and were idle for 
considerable periods during the day, and he was urged to put 
the plant on an eight-hour basis. However, he replied, "We 
prefer to operate ten hours and let the men take it easy." Now 
that is not what the men want. They want an eight-hour day 
and are willing to work energetically for eight hours. Very 
few men are shirkers and most of the so-called loafing is occa- 
sioned by conditions in a plant, not by laziness on the part of 
the employees. 

One of the strongest unions in the country, all of whose 
members work on an eight-hour basis, has laid down rules for 
its members which require them to give eight hours of actual 

1 By C. J. Morrison. Engineering Magazine, p. 363-6. December, 
1915. 



140 SELECTED ARTICLES 

work. The rules stipulate that the men must be in their work- 
ing clothes at their assigned places for work before time for 
starting work, and must not leave their places, clean up or re- 
move their working clothes until after time for quitting work. 
Moreover, each shop has a representative of the union who sees 
to it that the rules are obeyed. Whether or not the men work 
during the eight hours is up to the management. 

Of course if a plant simply changes from ten hours to eight 
and operates under rule of thumb methods, costs will be in- 
creased. On the other hand if the work is properly planned 
and despatched so that each worker always has a job and the 
necessary tools for performing the work, the costs can actually 
be reduced. 

To show that the costs can be reduced when a change is made 
to a shorter working day, the experience of three large concerns 
may be cited. These concerns operate in entirely different lines 
and among them employ a very diversified line of labor. In 
fact all the well known trades are represented. 

One of these concerns, a very large printing plant doing 
practically every line of printing, decided several years ago to 
change from a ten-hour day to one of eight hours. As compe- 
tition in most of their work was very keen, the change could 
not be made unless costs could at least be kept from increasing. 

The situation was studied for many months, and as leaks 
and wastes were found, measures to stop them were put in 
effect. Problems of power, light, heat, humidity, handling of 
materials, etc., were studied and conditions improved. Ade- 
quate methods of planning and despatching the work were in- 
stalled, with the result that delivery dates were met and idleness 
in the plant reduced to a minimum. Finally, the eight-hour day 
was inaugurated amid great rejoicing on the part of the em- 
ployees. In fact, the good feeling engendered was so deep 
rooted that it is still very much alive in the plant. 

The company also has had every reason to rejoice, as costs 
were materially reduced and profits were increased. This is 
shown by the fact that the stock has greatly increased in price 
due to the higher dividends paid. 

Since then most printing plants have been forced to an eight- 
hour basis and many have lost money. In fact, a number have 
gone into bankruptcy. 

The second plant in consideration is a large concern with 
over 5,000 employees which does partly commercial and partly 
government work. At the time when the law was passed re- 



PROBLEMS OF LABOR 141 

stricting work on government contracts to eight hours per day, 
this plant was operating on a ten-hour basis with the work 
divided about equally between the commercial and the govern- 
ment contracts. All of the contracts had been taken on esti- 
mates made up on a ten-hour basis. As the law made no pro- 
vision for increasing the price on government work and prices 
on commercial work could not be increased, the outlook was 
gloomy. Of course the commercial work could be continued on 
a ten-hour basis, but the company decided to throw the entire 
plant on eight hours and take the consequences. 

Very much the same plans were followed as outlined above 
in the case of the printing plant. The consequences were very 
satisfactory. Every contract came out under the estimates, and 
during the past lean years the plant has been operating at full 
capacity due to its ability to underbid competitors. 

A nearby competitor, operating under nearly the same con- 
ditions of commercial and government work, continued the com- 
mercial work on ten hours while working only eight hours on 
government contracts. They made no special preparations to 
meet the new conditions, but continued under the rule of thumb 
methods with the result that they lost money and were recently 
taken over by their financial backers. 

The third concern makes a household article, which is ex- 
tensively advertised and is well known throughout the United 
States and, to some extent, abroad. Their product requires a 
continuous operation of the plant, and they were working two 
shifts of eleven and thirteen hours, respectively. Every other 
plant in their line operates under these conditions, but they de- 
cided to run three shifts of eight hours each. Extensive prepa- 
rations were made, as in the other cases, but with the exception 
that plans were made for a continuous production at a uniform 
rate regardless of the seasonable fluctuations in the sales. This 
meant that the production exceeded the sales in some seasons 
while falling short of the sales in other seasons. However, the 
plan gave the great advantage of steady employment and of 
running at the same rate throughout the entire year. 

The employees were taken into the confidence of the man- 
ager and shown where the reduced hours would mean changes 
in their duties which upset all the traditions of the trade. With 
the exception of a single employee they replied that they did 
not care a hang for the traditions, but did want eight hours. 
This exceptional employee is working in another plant under 
the old conditions while his more tractable companions are 



142 SELECTED ARTICLES 

working the three shift plan for the old firm. Incidentally this 
plant has about the happiest set of employees to be found any- 
where. 

As in the other cases, the costs came out below the former 
figures, and this year the concern is giving the consumer more 
for his money. The sale price has been fixed for many years 
and it was not deemed advisable to make a reduction, 

A very recent experience of a firm that was forced to the 
eight-hour day is enlightening. The management noticed that 
the employees were getting ready to present demands for an 
eight-hour day and, in order to forestall trouble, granted them 
an increase in pay for which they had not asked. The}' grum- 
blingly accepted the increase and one month later struck for and 
obtained an eight-hour day. The management has very ma- 
terially increased its difficulties in meeting contract prices. 
When an aggressive man wants some particular thing, he may 
accept something else, but, nevertheless, he will eventually get 
what he wants. 

However, as a plant can earn money only while operating, 
why should it stand idle seven-twelfths or two-thirds of the pos- 
sible working time? Why not run 16 or 24 hours every day 
except Sundays and holidays? Of course such an arrangement 
means eight-hour shifts, but is a sure way of reducing expenses 
in most plants. 

The actual effect on any plant is, of course, dependent upon 
the propertions of the labor, material, and burden costs, but 
figures recently prepared for a plant may be used for an illustra- 
tion. 

The yearly burden figures for this plant when operating in 
different ways are as follows : — 

EIGHT HOUR SHIFTS 

3 shifts 2 shifts 1 shift 

Rent $50,000 50,000 50,000 

Power 45,000 28,000 12,000 

Insurance 10,000 8,000 6,600 

Depreciation 30,000 24,000 18,000 

Superintendence 29,800 23,200 16,600 

Interest 30,000 30,000 30,000 

Freight 20,000 14,000 7,000 

Shipping 12,000 8,000 4,000 

Repairs 15,000 10,000 5,000 

Supplies 6,000 4,000 2,000 

Shut down losses 2,600 15,000 15,000 

$250,400 214,200 166,200 

Pounds produced 9,000,000 6,000,000 3,000,000 

Burden per lb $ 0.0278 0.0357 0.0554 

Burden per lb. in excess of 3 shift plan 0.0079 0.0276 



PROBLEMS OF LABOR 143 

In these figures the one and two shift plans have been greatly 
favored as the manufacturers did not want to deceive them- 
selves into the three shift plan. The power account includes a 
very heavy figure for lighting on the three shift plan. Depre- 
ciation is charged off at a lower figure on the two and one shift 
plans than on the three, although it should be practically the 
same, for in a plant where all equipment is kept in repair, de- 
preciation is an item to cover obsolescence. Freight and ship- 
ping are made proportional to the number of pounds manufac- 
tured, although they would be actually lower in proportion on 
the three shift plan, as that plan makes a carload shipment every 
day, while the two shift makes a carload every day and a half, 
and the one shift a carload every three days. Even with these 
allowances the manufacturing cost is overwhelmingly in favor 
of continuous operation. 

Other items of administration, sales, and general office ex- 
penses would still further favor the three shift plan, but have 
not been considered in order not to confuse the issue. 

The selling price, in the case considered above, allows a net 
profit of three cents ($0.03) per pound over the cost on the 
three shift plan. This profit is reduced to $0.0221 on the two 
shift plan and to $0.0024 on the one shift plan. The total profit 
on the year's operation is therefore as follows : — 

3 shift 2 shift 1 shift 

$270,000 $132,600 $7,200 

The entire possible output of 9,000,000 pounds could be sold, 
but to manufacture it on a two shift plan would cut the profit 
down to so low a figure as to make the enterprise unattractive, 
while to manufacture the amount on a one shift plan of either 
eight or ten hours would result in a loss. 

In most industries competition is steadily becoming more 
severe, which means that costs must be reduced and labor kept 
satisfied. Modern methods of management combined with con- 
tinuous operation of plants is the logical solution of the prob- 



LABOR'S VIEWS ON THE SHORTER 
WORKDAY *■ 

Securing the shorter workdaj' is a matter engaging not only 
the attention of the working people of the United States, but 

1 From the American Federationist. November. 19 19. 



144 SELECTED ARTICLES 

the attention of the people of the world. The masses of the 
working people in all those countries in which Labor has 
reached the point of intelligence and forceful participation in 
the direction of industrial affairs are determined that the length 
of the working day shall be commensurate with the best stan- 
dards of health and happiness and that excessive hours of labor 
can no longer be tolerated. 

The Executive Council in dealing with the subject made this 
statement to the convention at Atlantic City, NJ. June 1919. 

In another section of this report, that is, the Reconstruction Program 
of the American Federation of Labor, which has been approved by us, 
the subject of hours of labor is considered. In view of the several reso- 
lutions of the St. Paul Convention dealing with the subject of the eight- 
hour day and the directions of the convention that the Executive Coun- 
cil should continue its work along the line of the shorter workday ac- 
tivities we feel it necessary to make further reference to the subject, for 
there is nothing in which Labor is more vitally interested than in fewer 
hours of daily toil whereby are afforded leisure for rest and recuperation 
and opportunity for the things that make life worth living. 

In the statistical section of this report record is made of those organi- 
zations which have been successful during the year in establishing the 
shorter workday. In every way within its power the A. F. of L. through 
its executive officers and organizers has assisted the organizations that 
have made the struggle for the shorter workday. 

There is nothing spectacular in such work. It is the steady onward 
progress day by day. Particularly in the textile industry has progress 
been made. Many of the workers of that trade now enjoy the forty- 
four hour week. Other organizations have conducted vigorous and fruit- 
ful campaigns for the eight-hour day or the forty-four-hour week. 

Few other years have shown a more satisfactory progress in the re- 
duction of the length of the workday than the year just closed. It is 
significant that the practical value of the shorter workday was shown 
most emphatically during that period of the nation's life when the utmost 
in producion was required to satisfy the demands of war. 

The satisfactor} r results, not only in health and comfort and the 
general well-being for the workers, but in volume of production as well 
were demonstrated during the war beyond all question. The rapid trend 
toward the general establishment of the shorter workday developed dur- 
ing the war must not be allowed to wane during the period of recon- 
struction. 

In order that the subject may be dealt with most comprehensively 
and completely to the end^ that the most constructive suggestions may be 
placed before the convention, we recommend that the entire subject be 
referred to the Committee on Shorter Workday with instructions to report 
to this convention for consideration and action. 

On a resolution presented to the convention the Committee 
on Shorter Workday submitted, and the convention approved the 
following : 

Whereas, The necessity of a shorter workday and a shorter work 
week is most essential to the full economic life and welfare of the 
workers; and 

Whereas, The securing of the shorter workday and week can only be 
accomplished by and through the -roper coordination of all the elements 
of organized labor of this country affiliated with the A. F. of L : and 

Whereas, The only practical method of inaugurating such shorter 
hours > of toil in all American industry where it has not as yet been 
established, is by inaugurating a campaign under the direct supervision 
of the Executive Council of the A. F. of L., in conjunction with the 
presidents of all _ affiliated national and ^ international organizations: and 

Whereas, This campaign should begin immediately following the ad- 
journment of this convention; therefore, be it 



PROBLEMS OF LABOR 145 

Resolved, That the Executive Council of the A. F. of L. is hereby 

authorized and instructed to call a conference at an early date in^ the 
city of Chicago. The delegates to be composed of the presidents of all 
affiliated national and international organizations; and. be it further 

Resolved. That this conference is directed to take up the shorter 
workday, to consist of not more than eight hours for the first five days 
of the week and not to exceed four hours on Saturday. 

Resolved, That this conference shall exert its full influence and power 
to establish within the shortest possible time, the intents and purposes 
as set forth in this resolution. 

Your committee agrees with the declaration made in the resolution 
that there is necessity for a shorter work week, and that this shorter work 
week can only be accomplished for the general labor movement by the 
coordination of all the branches of organized labor of the country. 

It agrees also that in order to inaugurate a campaign to bring about 
the desired result on a shorter work week proposition, the Executive 
Council of the American Federation of Labor should cooperate with the 
officers of international and national unions when efforts of those or- 
ganizations along the lines mentioned are being put forth. It also agrees 
that a campaign on the shorter workday can not begin too soon, but it 
does not feel that it would be wise at this time to instruct the Executive 
Council to call a conference at a specified place of the presidents of all 
affiliated unions or that this convention should give directions to such a 
conference if one is called. 

Your committee, therefore, recommends that this convention declare 
in favor of the eight-hour day as a maximum workday and the forty- 
four-hour week, and instructs the Executive Council to use its best efforts 
in assisting any organization that is endeavoring to inaugurate these work- 
ing hours. 

The following is the report on hours of labor made by the 
Committee on Shorter Workday and which was adopted by the 
convention. 

Reasonable hours of labor promote the economic and social well-being 
of the toiling masses. Their attainment should be one of labor's prin- 
cipal and essential activities. The shorter workday and a shorter work 
week make for a constantly growing, higher and better standard of pro- 
ductivity, health, longevity, morals and citizenship. 

The right of labor to fix its hours of work must not be abrogated, 
abridged or interfered with. 

The day's working time should be limited to not more than eight 
hours, with overtime prohibited, except under the most extraordinary 
emergencies. The week's working time should be limited to not more 
than five and one-half days. 

In giving consideration to a shorter workday at this time there are 
many things to be taken into consideration. In the first place it must 
be realized that during the war five^ million of the most active young 
men in the country^ were taken from industries for war service. In spite 
of this the production of the country during the war period was greater 
than it had been at any other given period in history. Of course, this 
great production was materially assisted by the introduction of women 
into the factories, and to a large extent the elimination of the liquor in- 
dustry and taking over of people previously engaged in that work for war 
production. 

Labor organizations for many years have been fighting to secure the 
eight-hour day, once known as the shorter workday. This eight-hour day 
meant forty-eight hours of labor per week. Because of the changed con- 
ditions brought about by the war a number of the industries have been 
able already to introduce the forty-four-hour week, continuing the eight- 
hour day with a half-holiday on Saturday. 

Only twelve years ago the International Typographical Union ex- 
oended more than four million dollars in securing for its members the 
forty-eight-hour week in the printing industry. At the present time that 
organization is negotiating for and will probably receive the forty-four- 
hour week through conciliation and without the expenditure of any sum of 
money. The garment working trades have succeeded in securing the 
forty-four-hqur week. Other industries have done or are doing likewise. 
Your committee believes it will be but a short time until the eight-hour 



i 4 6 SELECTED ARTICLES 

day with a half-holiday on Saturday, meaning a forty-four-hour week, 
will be the universal hours of labor and adopted in all industries. 

While this is most desirable and your committee recognizes that the 
Executive Council has used all its available power for the purpose of 
assisting in bringing about a forty-four-hour work week in all of the 
crafts it advises this convention to go even further than this. 

There is at the present time a large volume of unrest among the 
workingmen on this continent. There can be no doubt but that there 
are two reasons for this unusual condition — first, the high cost of the 
necessities of life; second, unemployment. 

Until wages are so adjusted that the earnings of labor will buy the 
same amount of the necessities of life that could be purchased by the 
earnings previous to the war, this unrestful exhibit by the working people 
has a foundation for its existence that can not be set aside. Previous to 
the war the dollar earned by Labor would buy a certain amount of a 
certain quality of food and clothing. The dollar earned at the present 
time will also buy a certain amount of a certain quality of food and 
clothing but it will not buy the same amount that the dollar earned pre- 
vious to the war would buy. Until this gap is bridged and the wages 
increased so that the same amount of the same quality of goods can be 
bought with the dollar of today as was possible before the war, the con- 
dition of the laborer will be less desirable than in the pre-war period 
Manufacturers and employers of labor should recognize this fact and 
increase the wages to this point without any controversy. 

Regarding unemployment. It is almost impossible to peruse a daily 
paper without finding somewhere in its columns a statement that every 
effort should be put forth to secure employment for soldiers returning 
from across the sea or from the camps maintained in this country. This 
is a most laudable effort and meets with the approval of all classes of 
people. However, for the general good of the community work must 
also be provided for civilians as well as ex-soldiers. If there is not 
sufficient work in the country to give the returned soldiers steady em- 
ployment and at the same time give continuous employment to all other 
people seeking work, then conditions must be so changed that all of these 
people can be taken care of. This can best be done by the shortening 
of the hours of labor. 

There is no doubt but that in the near future many organization' 
will determine that in order to take care of all of their members gaining 
a livelihood by employment at their trade it will be necessary to in- 
augurate a six-hour day. 

Your committee, therefore, recommends further that the Executive 
Council lend its assistance in the fullest degree to any organization seek- 
ing to establish a shorter workday that will provide for the employment 
of all its members. The organization itself must necessarily be the judge 
of what should be the length of the workday in the industry over which 
it has jurisdiction. When it has decided and established its claim to 
shorter hours, no matter what they may be, then the American Federation 
of Labor should lend its fullest assistance and your committee so recom- 
mends. 



EXECUTIVE COUNCIL OF THE AMERICAN 

FEDERATION OF LABOR ON THE 

SHORTER WORKDAY 1 

It is an accepted principle that the shorter workda} r is a fun- 
damental step in the betterment of the workers. The shorter 
workday affects the length of life, the health, the standards of 
life, and, in fact, every phase of the lives of the workers. The 
wage-earner whose hours of labor are decreased goes to work 
and comes from work at a different time than before, and con- 

1 From American Federationist. 23:181. March, 1916. 



PROBLEMS OF LABOR 147 

sequently comes in contact with people whose habits of living 
are different. From contact with these people of greater leisure, 
he establishes new ideals. He has a greater number of hours 
in which to rest, revive his energies and devote to recreation 
or the development of his mind. Thus the shorter workday 
makes of the worker a different person, a person of greater 
physical endurance, greater vitality, higher ideals, and conse- 
quently a person who will not be* satisfied with the old standards 
of the long hours of work. 

The improved methods of production which always follow 
a reduction in the hours of labor increase the productive power 
of the worker and consequently he is in a position to demand 
and receive higher wages. . Invariably every decrease in the 
hours of work per day is accompanied or followed by an in- 
crease in wages. The shorter workday movement is to secure 
to the workers greater material advantages. It is an important 
movement in conserving national vigor and health and in guard- 
ing against those tendencies that undermine true national power. 
From this is evident the importance of the action of the Phila- 
delphia Convention, in adopting the following: 

"The American Federation of Labor, as in the past, again declares that 
the question of the regulation of wages and the hours of labor should be 
undertaken through trade union activity, and not to be made subjects of 
laws through legislative enactment, excepting in so far as such regula- 
tions affect or govern the employment of women and minors, health, and 
morals; and employment by federal, state or municipal government." 



TRADES WITH THE 44-HOUR WEEK 1 

Summary of Movement for Shorter Work-Day 
and Work-Week 

Few other years have shown such reduction of the length of 
the work day and a shortening of the work week as the past 
two years. 

Labor organizations have for many years been urging the 
eight-hours day, once known as the "shorter work day." This 
eight-hours day meant forty-eight hours of service per week 
and often required a longer work day than eight hours for the 
first five days in the week to permit the observance of a half- 
holiday on Saturday after-noon. 

The eight-hours day or forty-eight-hours week is almost uni- 
versally observed in unionized branches of American industry. 

1 From Industrial Relations. Bloomfields' Labor Digest. 1:57-8. De- 
cember 6, 1919. 



148 SELECTED ARTICLES 

During the war and since the signing of the armistice, there has 
developed among the unions a demand for a shorter work week 
of eight-hours work for the first five days and a four-hour work 
day on Saturday, or a forty-four hour working week. 

Such 44-hour week prevails in at least two important indus- 
tries, viz. : the building and clothing industries. Agreements 
have also been entered into with national organizations of print- 
ing trades employers and international printing trades unions, 
providing for the universal observance of the forty-four work 
week throughout the printing industry March 1st, 1921, in all 
its various branches of commercial production. 

It is estimated at the present time that over a million and a 
half organized wage earners are working on a forty-four hour 
work week schedule. There will be increasing pressure in 
almost every craft and occupation for the forty-four work week 
schedule. 

From figures available, it is estimated that nineteen trades 
and occupations, which are national in scope, are working on 
the forty-four hour weekly schedule, affecting directly over iJ4 
million journeymen work-men. Eighteen additional trades and 
occupations have established this sort of work w r eek schedule for 
certain branches of their crafts or followings. The chart given 
below illustrates the trades and occupations where the forty- 
four hour w T ork week is established and observed throughout 
the trades and occupations and the number of all organized 
workers affected: 

While definite figures are not at hand of the total numbers 
of workers engaged in occupations whose members are in part 
working under the forty-four hour working week schedule, it is 
quite safe to say that all workers on building operations are on 
this shorter work week schedule. Unquestionably other trades 
and occupations not enumerated in this chart and who are 
directly employed on building operations are likewise working 
on a forty-four hour working week basis, thus augmenting the 
number of workmen who are now employed on a forty- four 
hour week arrangement. 

In the printing trades the shorter work week is quite 
generally observed in all the mechanical departments of news- 
papers, especially amongst the workers employed at night. This 
includes compositors, pressmen, stereotypers, proto-engravers 
and mailers. 

In the commercial branch of photo-engraving, most of the 
employees engaged at night are working on a forty to a forty- 



PROBLEMS OF LABOR 



149 



four hour work week schedule and quite a proportion of these 
workers employed during the day are now working on a forty- 
four hour week standard. By the operation of existing agree- 
ments and those in process of negotiation at the present time, 
it is safe to say that by January 1, 1920, practically the entire 
commercial branch of photo-engraving will be operating on the 
forty-four hour week standard for the day men and a lesser 
weekly standard for those employed at night. 

By agreements entered into with the National Printing 
Trades Employers Association and the several International 
Printing Trades Unions, the forty- four hour work week will 
become the prevailing standard of employment throughout the 
commercial printing industry by March 1, 1921, which in addi- 
tion to the photo-engravers, will include the compositors, press- 
men, electrotypers, book-binders and mailers. 

It is thus apparent that within the next year and a half, the 
entire commercial printing industry will be operating on the 
shorter work week schedule. 

Considerable attention was given this subject at the last con- 
vention of the American Federation of Labor, held in Atlantic 
City in June of this year. A special committee was appointed 
to deal with this particular proposal. 

The American Federation of Labor intends to support all 
affiliated organizations to attain the forty-four hour working 
week, and it is preparing to assist in a move for the six-hour 
day for certain trades if deemed essential to maintain members 
in permanent employment. 

Trades Where 44 Hours or Less per Week Prevail at Present. 

Organization of * Length of Number or 

Trade or Calling Work Day Work Week Workers 

Affected 

Asbestos Workers 8 44 3,000 

Amalgamated Clothing Workers ) 

United Garment Workers f 8 44 175,000 

Broom and Whisk Makers 8 44 1 000 

Carpenters 8 44 320,^00 

Carvers (Wood) 8 44 900 

Draftsmen 8 42-44 5,000 

Elevator Constructors 8 44 3018 

Fur Workers 8 44 io^ooo 

Granite Cutters 8 44 12,000 

Hod Carriers 8 44 44,72 1 

Ladies Garment Workers 8 44 145 000 

Lathers 8 40-44 7^oo 

Ef int J; rs 8 44 505,000 

Plumbers 8 44 50,000 

Sheet Metal Workers 8 44 20 000 

Slate and Tile Roofers 8 44 ~ 600 

Structural Iron Workers 8 44 21,000 

Window Glass Workers 6% 38 %[6oo 



150 SELECTED ARTICLES 

The Trades and Occupations in Which Branches of Work Are 

Operating on the Forty-four Weekly Schedule Are 

Illustrated in the Following: 

Organization of Length of Number of 

Trade or Calling Work Day Work Week Workers 

Affected 

Blacksmiths , 8 44-48 40,000 

Boot and Shoe Workers 8 44-48 41, '545 

Bottle Blowers 8 45 10,212 

Cigar Makers 8 45-48 40,000 

Copper Plate Printers 8 44-48 1,346 

Diamond Cutters 8 46% 600 

Electrical Workers 8 44-48 13,500 

Electrotypers and Stereotypers 8 44-48 5,500 

Flint Glass Workers 8 44-47 1,000 

Glove Workers 8-9 44-50 950 

Machinists 8 44-48 460,000 

Pattern Makers 8 44-48 10,205 

Paving Cutters 8 44-48 2,800 

Photo-Engravers . . 8 40-48 5A 00 

Pressmen 8 44-48 6,000 

Steel Plate Transferers 7H-8 -+1^-48 8* 

Teamsters 8-10 44-60 11,300 

Typographical Workers 8 44-48 65,000 



MAXIMUM VS. MINIMUM LEGISLATION' 

1. Public opinion is back of the movement to shorten hours 
and I am heartily in favor of this movement. A different view, 
however, should be taken in working this out from that which 
has been taken in the past. I believe that there are two distinct 
phases to this question : first, that hours should not be so long 
as to cause fatigue, and second, that when this length of hours 
has been reached, it is very desirable still further to shorten 
hours as a reward for efficiency. 

2. Generally speaking, the desirability of the second has 
been confused with the first and has led to drastic and unintelli- 
gent legislation without consideration of the facts. In my opin- 
ion the scope of legislation should be strictly limited to the first 
proposition. If such legislation is to be based upon facts, the 
result will not be an arbitrarily hard and fast limitation of an 
eight-hour day or a forty-eight-hour week applied to all in- 
discriminately, regardless of conditions. 

3. If we are to consider the facts, the industry itself must 
be taken into consideration from every point of view. In other 
words, there are conditions inherent in the nature of the indus- 
try that should govern the situation. In some industries wo- 
men are required to perform hard manual work while standing 

By Richard A. Feiss, Manager Clothcraft Shops, Cleveland. Annals 
of the American Academy, January, 19 17. 



PROBLEMS OF LABOR 151 

in water or confined to work rooms that have to be especially 
heated to a very high degree of temperature. It is apparent that 
the maximum limitation of hours in such an industry should 
be vastly different from that in an industry having good whole- 
some surroundings and requiring only a minimum of physical 
effort. 

4. Moreover, in order that the great mass of workers in a 
scientific organization may work the minimum of hours, it is es- 
sential that a few, whose business it is to prepare their work and 
whose actual efforts are generally semi-clerical and intermit- 
tently performed, work a greater length of hours than would 
be considered a proper standard for the general working force. 
For example, it will be generally conceded that the great mass of 
executive work of an organization requires a longer time for 
its performance than that of the general body of workers in the 
shop. Practical legislation must not only take this fact into 
consideration but must also provide for the large amount of 
semi-executive work which is also essential in a well organized 
plant to insure against the usual delays and other obstacles in 
furnishing work to the worker. This does not mean that the 
principle of limitation of hours should not be applied to all. In 
fact it is just as essential to have the hours of office and bank 
clerks, household servants and others included in maximum hour 
legislation as those of any other class of work. I believe, how- 
ever, that legislation should take into consideration all the facts 
and conditions and should not make any general provisions, 
rather making limitations dependent upon industry, occupation 
and other specific conditions. 

5. In the construction of legislation of this nature I wish 
particularly to call attention to the desirability of having limita- 
tions set rather for the week than for the day: Limitations for 
the day should be of such a nature as to permit weekly limita- 
tions of hours to be used up in any five days in the week. In- 
vestigations are bringing us more and more to realize that cumu- 
lative rest periods at the end of the week are more valuable than 
shorter rest periods scattered through the week. We believe that 
further investigation will undoubtedly prove that it is a most 
beneficial plan for workers to work somewhat longer periods 
during five days in the week in order to get two days of com- 
plete relaxation at the end of the week. It is our opinion that 
in the near future the ideal week for the worker will consist 
of five full days of work and two full days of rest. Unintelli- 



152 SELECTED ARTICLES 

gent legislation is one of the greatest obstacles to this attain- 
ment. 

6. I wish particularly to call attention to the fact that the 
sphere of legislation should consist in setting maximum limi- 
tations. Very often the minimum or at least the actual standard 
desired is set up as the maximum, the practical result being 
quite different from that intended by those who support this 
kind of legislation. Natually, the result is neither sound nor 
fair. 

7. In the vast majority of industries, and in fact in all 
industries involving consecutive or continuous manufacture, it 
is absolutely essential that a small group of workers work a 
little more than normal hours occasionally in order that the 
remainder of the workers in the business do not materially 
suffer. These extra hours of overtime, while sincerely de- 
precated by all, do not, however, become a burden, because in 
the ordinary course of things they are distributed and occa- 
sionally fall on this group and occasionally on that group of 
workers. In its effect upon any one group it amounts to a 
very small fraction of time, but it is very essential to the rest 
of the organization and should be provided for by intelligent 
legislation. To provide for the above practical contingency the 
maximum limitation of hours can be set somewhat higher than 
the actual effect desired. For example, if the maximum is fifty 
or fifty-two hours a week, the average regular time in a factory 
will necessarily be about forty-eight hours or less. 

Fig. I will show the chart of a typical day's work in a sci- 
entifically managed factor}'. This will illustrate the fact that, 
where work consists of a series of consecutive operations, the 
length of time worked by different operators varies considerably, 
and while in this instance there are a very few operators whose 
work covers a period of nine hours or a little over, the working 
time of the vast majority is considerably less. So the record 
for any week's work in the same factory would show a few 
operators working about fifty hours, while the actual hours of 
work average between forty-three and forty-four. 

Another way to meet contingencies of this kind is to have 
the law provide for a standard working schedule to be properly 
posted in every work room with a certain additional number 
of hours extra time permitted with certain other restrictions. 
There are of course many other ways for meeting this and 
similar contingencies which have to be faced in the practical 



PROBLEMS OF LABOR 153 

working out of legislation of this kind. The chief thing to my 
mind in the working out of reasonable legislation should be the 
taking into consideration of facts and their results and a full 
realization that the facts in each case should be the subject 
of scientific investigation by experts. That the opinion of ex- 
perts is valuable goes without saying. That consideration of 
the subject from this point of view is practicable I need only 
refer to a recent paper of Professor Frederic S. Lee of Colum- 
bia University entitled "Is the Eight-hour Working-day Ra- 
tional?" 1 In this article Professor Lee speaks of a classifica- 
tion, on a physiological basis, of work and workers: 

Such, a study is not impossible, and it would afford the only basis 
for a rational and really intelligent solution of the problem. It would 
doubtless lead to the establishment of no rigid, but an elastic system 
in which the work would be adapted to the worker, and the worker to 
the work. In one industry the duration of labor might be eight hours, 
in another it might be more or less than eight hours. So too, within a 
single industry one worker might labor longer than another. Such a 
solution could be made to satisfy both economic and social demands and 
lead to the maximum of individual and national efficiency. 



WHERE TIME IS MONEY 2 

The most important thing in the labor contract is the item 
concerning wages. Under the pressure of war prices there is a 
growing tendency to pay in accordance with the cost of living 
— a movement that is sure to mean greater comfort to the 
workers, not only during the war but after it. Second in im- 
portance, from the wage-earner's standpoint, but very near the 
top of the list nevertheless, is the question of hours. Here, too, 
the war has been influential in bringing about changes that will 
be of great and lasting benefit to labor. 

The idea has widely prevailed for years that the tendency 
toward shorter hours of labor, and especially toward the eight- 
hour day, was constant and marked. Yet strange to say, the 
census figures have not justified such a belief. The 1910 census 
showed that in 1909 only about 8 per cent of the 6,600,000 wage- 
earners then engaged in manufacturing, worked forty-eight 
hours or less in a week. In the five-year period following, there 
was a slight improvement. In 1914 the number of wage-earners 

x Read before the Section on Industrial Hygiene of the American 
Public Health Association, Cincinnati, October 25, 19 16. Appearing in 
the November 24, 19 16, issue of Science. 

2 By John A. Fitch. Survey. 39:494-5. February 2, 1918. 



154 SELECTED ARTICLES 

was over 7,000,000 and those who worked forty-eight hours or 
less in a week represented nearly 12 per cent of the total. 

But a change came with the year 1914. Since then there 
has been a constant and rapid extension of the eight-hour day. 
Early in 1916 an attempt was made to measure its progress by 
checking up reports appearing in newspapers and elsewhere. 
After correspondence with many firms and trade unions, Ruth 
Pickering was able to estimate in the Survey for April 1, 1916, 
that in the previous ten months 100,000 men had achieved the 
eight-hour day in the United States. At the end of that year, 
Dorothy Kirchwey Brown brought the study down to date by 
using the same methods. Writing in the Survey of January 9, 
191 7, she expressed the belief, based on figures which she pre- 
sented, that in the year 1916, 400,000 wage-earners had secured 
the eight-hour. 

Last fall a later and official statement appeared. In the 
Monthly Review of the United States Bureau of Labor Statis- 
tics for September, 1917, an estimate was made of the number 
of wage-earners securing the eight-hour day in 1915, 1916 and 
in the first six months of 191 7. The information was taken 
from leading trade union periodicals, labor papers, trade jour- 
nals, daily papers published in various parts of the country, 
annual and other reports issued by officers of labor organiza- 
tions, and replies to inquires made by the bureau. On the 
basis of the information thus secured, the bureau reported a 
total of 1,051,703 employes as having secured the eight-hour day 
during the time covered. 

Included in this number v/ere 400,000 railway employes. It 
seems doubtful, however, whether these should be counted. 
There had been no investigation of railway practice. It was 
assumed, apparently, that the passage of the Adamson law gave 
the train crews an eight-hour day. This is not a safe assump- 
tion. But if the railroad men are left out there remains a total 
of 651,703 — a greater number securing the eight-hour day in 
two and a half years than the total number in manufacturing 
industries who had it in 1909. 

Undoubtedly this movement is due in large part to the 
scarcity of labor and the necessity of conciliating those workers 
who are available. Another consideration that must have had 
a great deal of weight, is the new knowledge that has been 
acquired since the outbreak of the war on the subject of fatigue 
and its relation to output. Probably nothing that has ever been 



PROBLEMS OF LABOR 155 

published has had a more profound influence in this respect 
than the reports of the British Committee on the Health of 
Munition Workers. That England, in order to achieve her 
maximum efficiency and be in a position to carry on a war with 
the utmost vigor, should actually curtail working hours and 
frown upon overtime and Sunday work, is a fact of far too 
great significance to go unheeded. 

But there has been a considerable amount of experience in 
this country which has had its influence. The great increase in 
production at the plant of the Ford Motor Company, after 
working hours had been reduced from nine to eight, has been 
frequently pointed out. Other companies have been making 
experiments. The Cleveland Hardware Company, a concern 
employing several thousand men, had a regular working-day 
three years ago of nine hours. For years the company had ex- 
perienced a busy season in the middle of the winter, during 
which it was customary to work one hour overtime. Three 
years ago when the time came for going on the ten-hour 
schedule, the management, which had been studying the matter, 
decided to run straight through the busy season on the old 
nine-hour schedule. Superintendents and foremen were horri- 
fied. They expressed the belief that the company would not be 
able to fill its orders. Nevertheless, the rule was adopted and 
overtime was abolished. At the end of the year when they 
checked up results, they found that it had been the year of largest 
production in the history of the company. The next year when 
the time for the busy season arrived, instead of trying to meet 
it with the regular working schedule, the management took an 
hour off, and the whole force went on the eight-hour day. 
Again, foremen and superintendents expressed their misgivings 
and again the workers produced more goods than ever before, 
exceeding their work of the previous year. 

Last winter the Cleveland Hardware Company carried its 
experiment one step further. There is a large steam hammer 
in the plant, which pro"ved inadequate for the handling of all 
the work to be done. It was decided to install another hammer 
of similar type. While it was being installed the work was 
piling up and the men proposed that they work in shifts of six 
hours each, instead of eight. Only two men are employed on 
the hammer, so it was not an extensive experiment. It is in- 
teresting to note, however, that after taking two hours more 
from their working day, each team of men working six hours 



156 SELECTED ARTICLES 

so greatly increased their efficiency that they were able to turn 
out very nearly as great a product in six hours as they had 
formerly done in eight. 

From the men's point of view, the experiment was not en- 
tirely satisfactory, for on a piece-work basis their earnings were 
not quite as great as before. After the new hammer was in- 
stalled, they went back to the eight-hour schedule. The experi- 
ment did show, however, that at least in that kind of work the 
maximum of human efficiency is to be expected in a working 
day somewhere between six and eight hours in length. 

A similar experience has been that of the Commonwealth 
Steel Company, in an industry where it had not been supposed 
that the eight-hour day would lead to an increased output. 

At the Cloth Craft Shops of the Joseph and Feiss Company 
in Cleveland, the standard working day is eight hours, and the 
weekly hours up to January, 191 7, were forty-four. At that 
time the management proposed to the employes that the shop 
shut down on Saturday altogether, and that the four hours 
formerly worked on Saturday be distributed through the other 
five days of the week. The idea was based on the known fact 
that the employes — or at any rate the girls, who are in the ma- 
jority — frequently do housework in addition to their work in 
the factory and are, consequently, under an added physical strain. 
Some, even if they have no general housework to do, make their 
own clothes or do their own laundry work. It was believed 
under the circumstances that two full days of freedom from the 
factory would react favorably on individual efficiency in the 
shop. 

The result has more than justified the expectation. It was 
not long before the workers were accomplishing as much in five 
days as they formerly did in five and one-half, and doing it 
within the eight-hour limit, too. Advantage can now be taken 
of the week-end as never before. Some of the employes go to 
the country on Friday night and return refreshed and invigor- 
ated late Sunday afternoon. 

That the movement tow r ard an eight-hour day, and generally 
toward shorter hours of labor, is gathering headway and will 
continue on purely economic grounds, is indicated not only by 
the trend in the past months but by other evidences at hand. 
There is no industry where long hours of labor have more 
persistently been maintained than in steel-making. Yet I was 
told by a steel manufacturer last summer that he is convinced 



PROBLEMS OF LABOR 157 

of the effectiveness of the eight-hour day, and that the only 
reason why he does not now install it is that he does not know 
where he could get the extra men. He told me that as soon 
as the war is over and men are easier to get, he will put in 
three shifts of men throughout the plant in place of the two- 
shift system now prevailing. 

It is altogether likely now that the understanding of the 
necessity and value of the eight-hour day has become so general, 
that the movement will go of its own weight. But there are 
certain forces that will accelerate its movement. The unions 
stand as a unit for the eight-hour day. They mean to have it 
by whatever route it may come. In the past, the unions have 
been opposed to legislation for the shorter work day. Samuel 
Gompers has strenuously opposed it. The eight hours must 
come by union activity — by collective bargaining, not by law. 
Three times has a convention of the American Federation of 
Labor voted down a resolution favoring legislation as a means 
of securing eight hours. The radicals and the westerners were 
for it, the conservatives and the easterners were against. But 
of late a change seems to have come about. Mr. Gompers 
worked hard for the passage of the Adamson law, to give the 
eight-hour day to the train crews. In neither of the last two 
conventions of the American Federation of Labor was the issue 
directly raised, but resolutions were adopted without debate that 
seemed to indicate a shifting from the traditional position. 

And now, within a month, the New York State Federation 
of Labor has adopted a resolution favoring legislation not only 
for an eight-hour day but for a Saturday half-holiday. 

With this shifting of the point of view of the unions, the 
new attitude of the courts on this question becomes of greater 
importance. For a dozen years, after the adverse decision in 
the Lochner case involving a ten-hour law for bakers in New 
York, it had been assumed that a law fixing a limit on the 
hours of labor of grown men would be unconstitutional. Mis- 
sissippi was the first to challenge the bugaboo. A ten-hour law 
was passed there a few years ago. It went to the Supreme 
Court of the state and the law was sustained in a decision which 
laid down the principle of the "inalienable right to rest." This 
was encouraging, but the question remained in doubt, neverthe- 
less, until last year, when the Supreme Court of the United 
States in the case of Bunting vs. Oregon, definitely affirmed the 
right of a state to regulate hours of labor for men. 



158 SELECTED ARTICLES 

If the unions 'want to go ahead, then, and get eight-hour 
laws passed, they will not find the courts standing in the way. 
It is probable, though, that they will continue to make their 
gains, for the most part, through economic rather than legisla- 
tive methods. But no matter which road they choose, the move- 
ment will be hastened by a constantly increasing weight of evi- 
dence of the wisdom of the eight-hour day. It is this weight of 
evidence which has not only enlisted on their side the greater 
part of the enlightened public, but is rapidly bringing into line 
the employers too. 



MAXIMUM VS. MINIMUM HOUR 
LEGISLATION x 

There is obviously the greatest possible need for immediate 
action on the part of the Government to deal with the hours 
question on a national basis. Otherwise every trade in the coun- 
try will certainly have its own dispute on the question, and the 
settlement of all these disputes will take a very long time and 
will indefinitely postpone the reorganization of industry. In 
face of the urgent demand of labor, something has to be done — 
and done at once. The big manufacturing and employing in- 
terests have met and passed a strong resolution urging the 
Government to do nothing to grant the demands that are being 
made until a full inquiry has reported on the ability of British 
industry to bear the shorter hours demand. In view of labor's 
very definite attitude, such resolutions are hardly helpful. A 
settlement must be reached soon, and it is the height of folly 
to attempt to postpone it to the distant future. 

The main motives that have led to so urgent a demand on 
the part of labor are two-fold. Much the most important mo- 
tive is the obvious one — the claim for more adequate leisure 
and a better chance to lead a pleasant and reasonable life. 
The demand for shorter hours is essentially a human demand, 
and one which must be met on human grounds. The overwork 
of war-time, which was itself but a continuation of the overwork 
of pre-war times, will not be allowed to continue any longer; 
and, in their determination to abolish it, the workers have been 
immensely strengthened by the revelation of our immense pro- 
ductive capacity which the war has furnished. It has also, of 

1 From an article by G. D. H. Cole. New Republic. 18:247-9. March 
22, 1919. 



PROBLEMS OF LABOR 159 

course, been reinforced by the spectacle of war profiteering, 
and is now being stimulated further by the astonishing activity 
of the Government in divesting the nation of its industrial 
property, and restoring to the full every form of private profi- 
teering which it had been compelled by war-time necessities to 
restrain. The workers are sure— far surer than they have ever 
been — that there is wealth enough for everybody, given a just 
distribution of the national product, and given also a reason- 
able ordering of production. 

Far behind the human motive *in ultimate importance, but 
still a very material factor in the present situation, is the fear 
of unemployment and its effects, and a desire to secure the 
speedy absorption into industry both of the returning soldiers 
and of the war workers who are suffering discharge. The 
strength of this second motive varies very greatly from case to 
case. It is exceptionally strong in the mining industry, where 
great difficulty has already been experienced in absorbing the 
men returning from the army without displacing those already 
at work— a difficulty which has already led to several local 
strikes of importance. It is also important in the engineering 
and woodworking trades, which are bearing the brunt of war 
discharge, and also, strangely enough, in the building industry, 
which, thanks to the apathy of the Government, still shows no 
immediate sign of revival, despite the appalling shortage of 
houses. On the other hand, it naturally counts for little on the 
railways where every available man is still required. 

There is in some quarters, especially among economists, 
a tendency to sneer at this motive, and to point out that it is 
"unsound economically" to reduce hours of labor in order to 
provide for the unemployed. The alternative, we are told, is the 
provision of work. This argument would be sound only if two 
conditions were fulfilled: first, if the prevailing hours of labor 
were already short enough; and secondly, if the Government 
had made in advance its preparations for the provision of alter- 
native work. As neither of these conditions is fulfilled, surely 
the workers are fully justified in pressing for the immediate 
adoption of the shorter hours which they would in any case 
demand, and in using as an auxiliary argument the need for 
absorbing the unemployed. 

^ What, it will be asked, ought the Government of the United 
Kingdom to do in face of the present situation? I believe that 



i6o SELECTED ARTICLES 

it ought at once to announce and put into operation a compre- 
hensive scheme for dealing with unemployment. But it ought 
to do more than this. It ought to tackle the whole hours ques- 
tion on a comprehensive basis, and to do for the industries of 
the country as a whole what it did under pressure for the 
miners some years before the war. The time is ripe for a uni- 
versal Eight Hours act, applicable to all trades and callings, 
and including, of course, special provisions dealing with the 
hours of child labor. It would not be possible to settle details 
in such a measure; but, given the general principles and their 
intended application to weekly and daily employment, the va- 
rious trades could readily work out the details for themselves. 
An Eight Hours act could, of course, only prescribe a maxi- 
mum day: it would not prevent the miners, or any other indus- 
try having special conditions, from pressing for a lower maxi- 
mum of hours ; but it would bring order out of the present 
chaos of conflicting demands and provide general principles in 
which the various claims could be argued out. That would be 
an inestimable advantage, and may well be the only w r ay of 
avoiding chaos. 

The hours question has come to a head first in the United . 
Kingdom; but it is, of course, far from being a merely national 
issue. The problem of the international regulation of the hours 
of labor forms one of the principal questions which will have 
to be dealt with by the Peace Conference, and the solution 
arrived at will have to be incorporated in the proposed Inter- 
national Labor charter. Moreover, it is more than probable 
that the hours question will be the principal factor in the in- 
dustrial demands of labor in almost all civilized countries. 
There are already signs enough that it is in the forefront of 
labor's claims in other countries besides the United Kingdom. 
The lead which is now being given by organized labor in the 
United Kingdom will be followed up elsewhere ; and if the 
British Government gives a lead in meeting that demand, its 
action also will be of international consequences. Among purely 
industrial labor questions, the hours question is at the present 
time by far the most important, and its importance is significant 
of the human character of the new demands of labor — of the 
insistence on the right not only to reasonable remuneration for 
work done, but also to reasonable leisure as an essential part 
of a reasonable "standard of living." 



PROBLEMS OF LABOR 161 

THE SIX HOUR DAY 1 

The Hours of Labor 

There is a point I would like to touch upon, and that is the 
hours of labor. I promulgated a scheme which was called a six- 
hour working day, and it has very often given the impression— 
and I, myself, of all people in the world, cannot tell how it came 
about, — that I was advocating something that would add to the 
cost of production, that v<ould limit production and that would 
generally bring on the downfall of industries in any firm or 
country that adopted it. 

On the contrary, my ideal is exactly the opposite. I do not 
know what the hours of work in this country were a century 
ago. I know what they were in my own country, unhappily. At 
the beginning of the nineteenth century men worked for four- 
teen hours a day, and women worked beside them the same num- 
ber of hours, and down in the mines women had to work, and 
children of nine years of age. They had to toil down in the 
mines, and even children of six years of age worked in the cotton 
mills. The employers of those days said that any shortening of 
the hours, any restriction or limitation on woman labor or child 
labor, would be ruinous to the industry. 

You have only got to search through the debates in the 
British Parliament, as I have done, to find that that was the cry 
of the opposition. There were one or two fine spirits who op- 
posed that sort of thing and who tried a reduction from fourteen 
to twelve hours, and were able to stay and to demonstrate that, 
instead of a reduced output, they got an increased output, that 
the human being produced more in twelve hours than in four- 
teen. Then, from twelve hours, which was the first limitation 
we had in England, the hours were limited to ten. 

That was some sixty years ago, vdien ten hours was made a 
days' work for a workman. Women were limited as to the 
occupations they could enter, and the age for child labor was 
raised to thirteen years. And again the industry became more 
prosperous ; not only so, but the employers became more pros- 
perous. Everybody became more prosperous. 

The Eight-Hour Day 

We are now up against this problem. We have had an eight 
hours' day for many years in England. The eight hours' day re- 

1 From an address by Lord Leverhulme before the Boston Chamber af 
Commerce November 25, 1919. 



162 SELECTED ARTICLES 

suits in this, that men and women enter our industry, at 
monotonous occupations, at lathe, loom or bench, at fourteen 
years of age, and, if their physical strength holds out, continue 
until they are seventy, when they are entitled to an old age pen- 
sion of very meagre dimension. They must toil in factory and 
work shop during all the hours of the day that are comprised 
in those eight hours. 

Saturday afternoon has always been a holiday with us, for 
over sixty years. Therefore, the number of hours of work, as a 
rule, has been the nine hours or eight and one-half hours on 
every day except Saturda}', and on Saturday the employees work 
in the forenoon and have the afternoon off, making forty-eight 
hours of work in the week. 

Petition From the Girls 

What was the result? I will tell you how my attention was 
called to this matter. It was through a little petition sent to me 
from the work girls in the factory, saying that since the hours 
for the closing of the shops had been altered in Liverpool they 
had no opportunity to do their shopping on Saturday. 

The shops also closed in London on Saturday afternoons at 
one o'clock, and the girls, therefore, found that they had no time 
for shopping. They asked if they might have an opportunity to 
do their shopping, and I want to show you how reasonable the 
request they made was. It was nothing of a terrifying nature, 
but was a perfectly reasonable request. They simply asked that 
they might have one afternoon off in the month to do their shop- 
ping. 

It set me to thinking, and it seemed to me that we could, 
by a little change in our organization, so increase our output, 
reduce our cost and at the same time reduce the hours of labor, 
that both men and girls could have one morning or afternoon 
off, not in a month, but in alternate weeks, with benefit to them- 
selves. 

Where It Will Work 

Of course, I want you to understand the limitations of this 
proposal. The limitations are these, that where the cost of pro- 
duction, of the interest and depreciation on machinery, interest 
on capital employed, salaries of the permanent staff, where these 
charges are equal to the weekly wage bill, you can apply it — that 



PROBLEMS OF LABOR 163 

is, in cases where you can reduce the cost, reduce the hours, in- 
crease the output, and consequently reduce the cost of the fin- 
ished product. 

Where, as in many industries, the interest on the capital em- 
ployed, the interest on the cost of machinery and buildings, the 
rates and taxes, and all these outgoings which have to be in- 
curred in any case, are less than the weekly wage bill, then at 
present, if that system were adopted, it would have to be 
adopted because of other reasons than reduced cost of produc- 
tion and increased output. 

But, fortunately for the workmen in industries of the char- 
acter of which I am speaking, where it is not possible to adopt 
it and still reduce the cost of production by increasing the output 
— the greatest example of which with us is farming — the health 
of the employee is not affected by the impossibility of reverting 
to a shorter working day. The man working on a farm has a 
variety of occupation. 

The seasons afford him a variety, each day affords him a 
variety. But not so with the man in a monotonous engineering 
shop or a mill, or at the loom, nor a woman at these occupations. 
Therefore, in occupations where it is not possible to do this to- 
day it may be possible to do it tomorrow — as, for instance, in 
agriculture, when it employs more machinery and men become 
less and less and machines more. But in those occupations the 
health of the men is not suffering, nor the health of the women, 
as it is in our closed, confined, monotonous factories. 
Put First Things First 

So that we can complacently set ourselves to the task of 
dealing, first, with those people and those occupations where 
health is affected. Why common humanity demands that we 
should commence in that way. 

Our care for the health of our citizens demands that we 
should begin in that w r ay; and later on, I am convinced, as in 
connection with all these works, appetite grows with what it 
feeds on, and that when we have got a thoroughly organized 
system of two shifts each day, six hours each, in our foundries 
and factories, with an output increased thereby by fifty per cent 
in a 72-hours' week instead of the 48-hours' week, with these 
fixed charges of interest, depreciation, and so on, divided over 
an output fifty per cent greater, when we have got that working 
smoothly we shall find that it will be having its effect on these 
other industries. 



164 SELECTED ARTICLES 

THE SIX HOURS DAY 1 

What the workers are asking for is more life and liberty, a 
fuller and a freer satisfaction of their needs as human beings. 
Of course, they want for this a larger share of the wealth they 
produce. But they recognize that war is not a wealth-producer, 
and in their present wage demands they are rarely asking for 
more than a return to their pre-war standard of subsistence. 
This moderation serves to bring out into strong relief the gen- 
eral demand for shorter hours. The forty-hours' week, or even 
the six-hours' day, has suddenly won its way to the front place 
in the demands of labor. The eight-hours' day took a genera- 
tion of crying in the wilderness before it entered the practical 
politics of industry, and gradually crept into the standard of a 
few strong and favored trades. But this new demand is not 
simply a next step. It is a definite new challenge to our indus- 
trial order. For it is not based upon the old economic contention 
that workers have hitherto been wastefully employed, in that 
they are able and willing to put out the same amount of produc- 
tive power in a shorter as in a longer working day. No doubt it 
is sometimes urged that just as an eight-hours' day was found as 
advantageous as a ten-hours' day from the standpoint of output, 
so a further reduction of hours may be similarly found almost 
costless. But this is not the real contention of the advocates of 
the six-hours' day. They do not pretend that speeding-up will, 
or ought to, compensate for the loss of hours. They say that is 
not their concern. What they are after is liberation from the 
machine. They want more time and energy to live their own 
lives and take their part in whatever life can bring. 

For what, after all, is the free life of a worker after the fuil 
factory day, or even the eight-hours day, which means at least 
a nine-hours' day in the works, the pit, or on the railway? 
Week in, week out, it is a too heavy tax upon the body and the 
mind of all but the strongest. It exhausts the nervous energy, 
stamps its mechanical routine upon the soul, and disables its vic- 
tims for any beneficial use of leisure. There is much dull, heavy, 
and uninteresting, even dangerous, work that has to be done. 
Workers do not refuse to do it. But they insist that it shall be 
reduced to such time and other conditions as shall not stamp its 
nature upon theirs. It is not enough that there shall be a bare 
margin of free time to recover from exhaustion before the next 

1 Nation (London). March 8, 1919. p. 671-2. 



PROBLEMS OF LABOR 165 

day's work begins. What is wanted is so wid6 a margin as to 
reduce mechanical servitude to a subordinate place in their lives. 
If it takes a full quarter of their hours, that suffices. 

This does not signify a life of idleness, or even dissipation, 
as middle-class moralists sometimes suggest. A little leisure is 
a dangerous thing, especially the leisure of physical and nervous 
exhaustion. It is upon a large leisure that the hopes of human- 
ity rest, a leisure large enough to provide for every man the 
opportunity to cultivate his human tastes and aptitudes. This 
does not mean that less wealth will be produced, if wealth be 
taken in its true meaning; for health, family life, education, 
reading, art, recreation, would far more than compensate some 
loss in material output. 

But must material output suffer? Must the nation pay for 
more leisure by any reduction of the economic product? This 
challenging question is met by one of our most successful men 
of business, Lord Leverhulme, with a triumphant negative. The 
opening part of his interesting volume, "The Six-Hours' Day", 
sets forth the case of this great reform, basing it upon the ma- 
chine-economy. Machinery, instead of the tyrant, is to be the 
liberator and the friend of the worker. It is to increase his 
wages and to make him moral and intelligent. 

The modern machine knows nothing of religion or moral laws, yet it 
is one of the greatest religious and moral teachers the world has pro- 
duced in modern times. However far and wide we extend mechanical 
abilities and machine power, we come finally to the necessity of pro- 
viding intelligent and careful men for their control and running. Ma- 
chines cannot run alone, and workmen of skill, high character and moral 
conduct are essential to successful control." "All the tendencies of the 
greater use of machinery are in the direction of improving man. 

It might, perhaps, appear that man could not have too much 
of this benevolent and moralizing influence. But one of the 
greatest boons this universal benefactor is able to bestow is 
leisure. For there are two important characteristics of modern 
machinery; it is extremely expensive, and it can work all day 
without tiring. Therefore, the costlier the machine, the more 
important to make it work long hours. But since no man can 
here keep pace with the machine, you must set two, three, or 
even four men, in relays to do it. At present, a great deal of 
more expensive plant is only utilized for eight or nine hours a 
day, and the product is what a single shift of overworked men 
or women can get out of it in that time. 

Wherefore this waste? "We must have a six-hours' work- 
ing day for men and women, and by means of six-hour shifts 



166 SELECTED ARTICLES 

we must work our machinery twelve, eighteen, or even twenty- 
four hours." This can be done, without reduction of wages on 
the shorter day, in all industries where the cost of production in 
overhead charges is as great or greater than the cost of wages. 
This is Lord Leverhulme's contention. The cost of the shorter 
day can be recouped in great part by this greater volume got out 
of the plant. Since in most well-equipped factories and work- 
shops to-day the cost in overhead charges is at least double the 
cost in wages, this economy is immediately applicable to these 
great sections of industry. To less advanced industries, and to 
such occupations as agriculture, it cannot at once be fully ap- 
plied. But as labor-saving machinery advances in these back- 
ward industries, so the same economy will appfy. Of course, if 
it were to turn out that the worker produced as large an output 
in the six as in the eight hours, the problem would be greatly 
simplified, for the reform would cost nothing, and the fuller 
utilization of the plant would be pure gain, going in higher 
wages, bigger profits, or lower prices, according to the forces 
controlling distribution. 

Lord Leverhulme cites a good deal of evidence to show that 
a shortening of the work-day is not attended by a reduction of 
output. But most of this evidence is in experiments of shorten- 
ing the full factory day, and only one or two cases go so far as 
to support the view that a reduction from eight to six hours 
would be attended by no loss of output. It is obvious that some 
limit to the economy of shorter hours must exist, and it is 
probable that men will not turn out quite so much in a six as in 
an eight-hours' day. But, then, they haven't got to is Lord 
Leverhulme's contention, provided that the machine-economy 
makes up the loss. After the war, it will be particularly im- 
portant to work our existing buildings and plant more fully 
because additional fixed capital will not for some time be pro- 
curable. On the other hand, there will be abundance of spare 
labor to fill up a two or three shift system. The millions of men 
and women released from the fighting forces and from Govern- 
ment work of various kinds can only find lucrative employment 
by some such expansion in demand for labor. 

The chief objection Lord Leverhulme feels called upon to 
meet is the embarrassment of so much riches, i.e., the question 
of disposing of so large an increase of output as would be got 
by his double or treble shift system. But the difficulty is not 
serious. For, if the worker got as much money on a six as on 



PROBLEMS OF LABOR 167 

an eight-hours' shift, and millions more workers were brought 
into employment, the purchasing power of the working classes 
would be so increased that they themselves would furnish most 
of the enlarged demand, while the reduced cost per unit of the 
output would enable the expanding foreign markets to take off 
the residue. Economists might, perhaps, reasonably question 
whether, with rising wages, cost would be so reduced. But we 
are disposed to think that Lord Leverhulme's main thesis is 
strong and fruitful. The great problem before us is how to re- 
duce the proportion of human to non-human physical energy in 
the production of material wealth. And it is clearly in the main 
a problem of intelligent organization of existing and available 
resources. We want more wealth with less toil. We must re- 
organize our pre-war system of industry, if the problem is to be 
solved. The powerful instinctive demand for shorter hours will 
compel the most conservative and unenlightened employers to 
make their business interests square with the plain dictates of 
humanity. 

For business men can think, when they are put to it. The 
imperfections of most human arrangements are so great and 
numerous as to admit quite easily of large improvements when 
those responsible are pricked by the spur of necessity. This is 
why the workers are so obtuse to the argument that such and 
such a new demand must raise prices, ruin the trade, and then 
where will the workers be? They know that thought and con- 
tiivance have in the past found a sufficient loophole of escape 
from ruin, and they have enough confidence in the brains and 
resourcefulness of the employers to believe that if they have to 
put up with a six-hours' day without reduced pay, they will 
somehow manage to foot the bill, and leave a margin of profit. 



(b) Night Work 

THE BAKING TRADE 1 

The Report on Night Work 

The Committee appointed by the Minister of Labour in April 
last "to inquire into the practice of night work in the bread 
baking and flour confectionery trade, and to report whether it 

1 From The Month's Work. (British Ministry of Labour) 2:33. August, 
1919. 



i68 SELECTED ARTICLES 

is desirable in the interests of those engaged in the trade and 
of the community that the practice should be abolished or modi- 
fied," have now presented a report, recommending the abolition 
of night work after an interval. The Committee sat on 23 
occasions between 24th April and 4th July, 1919, heard 65 wit- 
nesses, and considered written evidence. 

The report commenced with a survey showing the extent 
of night work in normal times, and sketched the history of 
the agitation against night work by referring to the resolutions 
passed by the Trade Union Congresses and the attempts made 
to abolish it by legislation since 184S. These attempts were un- 
successful. One effect of the Bread Order, 1917, which was in- 
troduced to secure economy in the consumption of cereals by 
prohibiting the sale of "new" bread, was, however, as a side issue 
to modify night work very considerably. In the opinion of the 
Committee the removal of the Bread Order would not result in 
the re-introduction of night work to such a degree as it had 
existed before the Order, because agreements have been made 
between Trade Unions and Employers' Associations abolishing 
night work in various districts. 

The case put forward by the employers was that night work 
was necessary in many districts in order to meet the legitimate 
demand of the public for fresh bread, and to ensure its delivery 
during ordinary business hours. This was specially the case 
with large wholesale bakers whose delivery was spread over a 
large area. The operatives, on the other hand, stated that night 
work was detrimental to health, that it interfered with the nor- 
mal and social life of the workpeople, and that in any case it 
was unnecessary, as the public could be supplied with fresh 
bread under a day work system. 

The Committee decided that there was no justification for 
the continuation of night work in the Baking Trade, and they 
recommended that legislation should be introduced prohibiting 
the employment of men in bakehouses between the hours of 11 
p.m. and 5 a.m., except in the cases of doughmen and firemen. 
Certain further exceptions were also provided for, including one 
night per week to cope with the week-end trade ; exemptions not 
exceeding ten nights in the year to provide for public holidays ; 
for a certain stated period in towns doing a seasonal trade, or 
where there was a sudden influx of visitors ; also in the event 
of a breakdown ; or during the repair of plant, etc. The opera- 
tion of the proposed Act would not extend to bakers working 



PROBLEMS OF LABOR 169 

on their own, and employing no labour, unless it can be shown 
that bakers employing labour are put at a disadvantage by their 
competition. 

In order to allow the Trade to adjust itself to these condi- 
tions, it is recommended that they should not come into opera- 
tion until two years from the passing of the Act, but it was 
suggested that the Principal Secretary of State should have 
power to make an order applying local agreements in any dis- 
trict without delay. 

The Report recommended also that provision should be made 
to enable leaseholders to make alterations to premises and plant 
rendered necessary by the change from night to day baking, if 
lessors should refuse consent. 



TENURE OF EMPLOYMENT 

A DISMISSAL WAGE: TWO WEEK'S 
EXTRA PAY 1 

A Safety Check on the Dangers of Rapid Firing 

In a mature and humane civilization great importance is at- 
tached to the economic security of the individual. As the civil 
service develops, the public employee is protected in various 
ways against abrupt and arbitrary dismissal. In universities it 
is customary to notify the instructor a considerable time in ad- 
vance of the termination of his employment. The professor is 
usually given a year's notice or else his salary is continued for 
at least a half year after his services are dispensed with. School 
boards, hospitals, churches and non-gainful organizations gener- 
ally feel that it is indecent to cut off a faithful servant without 
giving him a reasonable time to look around for another place. 
Even from private employers, professional men are usually able 
to secure an agreement not to end relations without a month 
or more of notice. 

On the other hand, the common practice of American indus- 
trial employers is really amazing in its lack of consideration for 
the worker found superfluous. No doubt many firms take a 
pride in building up and maintaining a stable labor force and 
give serious attention to the plight of the men they have to drop. 
But the average employer seems to give himself not the slightest 
concern as to what is to become of the worker let out thru no 
fault of his own. I have heard of a firm long aware of the 
necessity of curtailment waiting till half an hour before the 
evening whistle blew to post a notice throwing hundreds of men 
out of a job for an indefinite time! Since Americans are not 
generally inhumane, the barbarous "firing" policy so character- 
istic of our industries can be accounted for only as a survival 
from the time of the small concern when the competent work- 

1 By Edward A. Ross, Professor of Sociology, University of Wiscon- 
sin. Independent. 97:365-6, 384. March 15, 19 19. 



i 7 2 SELECTED ARTICLES 

man dismissed could walk around the corner and get a job just 
as good. That such is not the case today may be learned by 
simply interviewing workingmen as to what loss of job has 
meant to them. What tales of tramping the streets looking for 
work, of rushing hither and thither on a rumor that this firm 
or that is taking on men, of returning night after night worn 
out and discouraged to an anxious family, of the frantic cutting 
down of household expenses, the begging of credit from butcher 
and grocer, the borrowing of small sums from one's cronies, the 
shattering of hopeful plans for the children ! Here are real 
tragedies, hundreds, nay thousands, of them a year in our larger 
centers, yet the general public goes its way quite unconscious^! 
No wonder among wage-earners the bitter saying runs, "A 
workingman is a fool to have a wife and kids." 

What of the far greater number who are employed con- 
tinuously but who are always worrying lest they lose their jobs 
without warning? From conversation with wage-earners one 
gathers that fear of finding a blue slip in the pay envelope really 
poisons life for multitudes. So long as many employing con- 
cerns move in the present ruthless inscrutable way, not deigning 
to give their men any advance hint of what will happen to them, 
there will be resentment and unrest in the ranks of labor, no 
matter how reasonable the hours and pay. 

The tragedy in the situation of the wage-earner in the mod- 
ern industrial organization has been his insecurity. Step by step 
we have lessened this. Mechanics' lien laws did away with the 
risk of losing his pay, postal savings banks with the risk of 
losing his savings, "safety first" with the risk of preventable in 
dustrial accidents, accident compensation with the risk of los- 
ing livelihood by injury in his work, pensions with the risk of a 
destitute old age. The chief insecurity which remains is that 
of losing one's job. How can we lessen that? 

There is no virtue in the suggestion that the law should re- 
quire either party to give a fortnight's notice before terminating 
relations. The workman who has received notice will be of 
little use the ensuing two weeks and the average employer would 
prefer to make him a present of his wages and let him go. On 
the other hand if the workmen were obliged to give notice two 
weeks before quitting they would lose their sharpest weapon — 
the sudden strike. 

The true policy is to establish for the workman who has been 
with the employer long enough to establish the presumption that 



PROBLEMS OF LABOR 173 

he is of value — say six months — the legal right to receive a fort- 
night's free wages when he is dismissed without fault on his 
part. This would give him two weeks to look about and find 
himself another job. Even if he has nothing saved up and no 
credit it would be a month or more before his family came into 
acute distress. There are few competent men who cannot find 
a job in a month unless times are hard and during hard times 
their resources will be an altogether different provision, viz., 
unemployment insurance. Still more important, however, is the 
consideration that the man who has made good on the job and 
continues to make good would be relieved of the haunting fear 
of offhand dismissal. It will not pay his employer to fire him 
for frivolous reasons and if business is slack the men let out 
will be men recently taken on, who have not yet established the 
right to the dismissal wage. 

The dismissal wage should not be looked upon as something 
held back out of wages which a man will never get unless he is 
"fired." It should be regarded in the light of the "compensa- 
tion for disturbance" which some countries allow the evicted 
tenant who has farmed the land well. 

Of course the man who "fires himself by persistent negli- 
gence or misconduct should get no dismissal wage, and since 
an unscrupulous employer might charge fault when there is 
none, there will have to be local boards to hear complaints on 
this score. 

The employee who quits of his own free will to take a better 
job or do something else has no claim. But since such an em- 
ployee might "soldier" or grow careless just in order to get 
himself "fired" the employer must have the right to escape pay- 
ing him a dismissal wage by proving to the local board that he 
is "soldiering." As a matter of fact no workman could afford 
to get the reputation among employers of being that kind of 
a man. 

Until we have accident, sickness and old age insurance, in- 
competency arising from accident, sickness or old age would not, 
of course, release the employer from the obligation to pay a 
dismissal wage. The dismissal wage might be combined with 
a system of unemployment insurance by providing that the un- 
employment allowance should not begin until the end of the 
term for which free wages is paid. 

The legal dismissal wage should not become involved with 
strikes and lockouts. Let the rule be that the striker has not 



174 SELECTED ARTICLES 

relinquished his job any more than the man who has been absent 
on account of sickness. When the man resumes his job — 
whether on his terms or on the employer's — he has whatever 
rights he had when he struck. Only in case he applies for his 
job and is refused is he entitled to a dismissal wage. If he 
never applies, he gets nothing. 

Let the lockout be looked upon as if it were a temporary 
stoppage owing to a fire or a dearth of fuel or raw material. 
When the men are taken on again all is as before. If they stay 
away they get nothing. If they are refused their old jobs they 
get the dismissal wage. 

If the employer goes bankrupt his men's dismissal wages 
constitute precisely the same kind of claim on his assets as their 
back wages. 

Since an employer could always avoid dismissing a man by 
cutting his wages to so low a point that the man would quit of 
his own accord, the cutting of a competent .workman's pay be- 
low the "going" wage for the time and place should be construed 
as dismissal. Likewise when an employee without fault is re- 
duced to a lower position in the works or is shifted perma- 
nently to harder or more onerous work the workman should 
have the option of staying on or claiming dismissal pay and 
leaving. 

What of "lay off" when, on account of slack business, the 
men dismissed are not replaced? Instead of dismissing men, 
let the employer cut down hours uniformly in the shop and ndt 
until he cuts them below half time shall the men have the option 
of staying or of taking their dismissal wage and leaving. When 
a man is laid off because there is not enough work to keep him 
busy but the job is supposed to be held open to him, let the dis- 
missal wage payment be strung out thru six weeks. If the em- 
ployer has him back sooner he saves himself something. 

A board to decide all such questions should be created in 
each industrial community. One member should represent em- 
ployees, another employers and the third should be named by 
the State Industrial Commission. 

How would the legal dismissal wage affect employers? 

The obligation to pay a dismissal wage would give such 
employers a motive to make their practice conform to that of 
those thoughtful and humane employers who have brought their 
annual turnover in some cases down to 30 per cent with profit 
to themselves and contentment to their employees. They would 



PROBLEMS OF LABOR 175 

find it paid to give attention to human engineering, to install 
employment managers who investigate why an employee is doing 
badly and find a way to remove the cause. Before letting a 
man go with a fortnight's free wages they would try him out 
in different positions or departments in the hope of finding the 
right place for him, or would even provide him with the instruc- 
tion which would enable him to make good on the job. In time 
of slack business they would put their men on part time rather 
than turn some of them off. 

Just as the burden of accident compensation sinks to the min- 
imum in the case of the employer who takes the most pains and 
goes to the most expense to eliminate accidents from his mill, 
so the burden of a legal dismissal wage will be least on the 
employer who picks his men most carefully, tries them out most 
speedily and gives the most care to building up a permanent 
labor force. By providing the worker with an added induce- 
ment to keep a good job and the employer with an added in- 
ducement to keep a good man, it would tend to stabilize Amer- 
ican industry and favor the survival of the types of employer 
and worker society ought most to encourage. 



UNEMPLOYMENT AND HEALTH INSURANCE l 

Unemployment is the only purely industrial hazard. It is 
far and away the most disastrously costly of all hazards. It is 
the one about which we know least and in regard to which we 
have done almost nothing. The people of the United States 
have given almost no attention to the business of directing 
workmen to employment. We have done nothing at all to fur- 
nish employment to the unemployed in dull times on public 
works, highways, harbor improvements, public buildings, and 
other construction work for the community. Yet such work 
has to be done, and it is perfectly practicable to arrange to 
have these works constructed during dull seasons and in times 
of depression, so as to relieve the stress of slack work and 
unemployment in such periods. The policy of pushing public 
construction work during the dull season and in times of de- 
pression is no new proposition. The experiment has been tried 

1 From an address by Royal Meeker, U. S. Commissioner of Labor 
Statistics. Prepared for the convention of the Association of Govern- 
mental Labor Officials of the United States and Canada, Madison, Wis 
June 2-4, 1919. 



i;6 SELECTED ARTICLES 

abroad and has worked successfully. In this country, however, 
when unemployed workmen have clamored for work, we have 
pointed out to them our stupendous resources, our marvelous 
economic genius, the majestic magnitude of our industries, and 
the tremendous velocity of our progress, and we have said, "No 
man who really wants work need be idle." Long sophomoric 
essays have been written to prove that the only idle people in 
our unprecedentedly prosperou: country arc those who will net 
work. How otherwise could be explained the numbers of idle 
men and women in the midst of our plenteous prosperity? In 
recent years we have begun to distrust this simple explanation 
of unemployment. The laboring men and women of the country 
are insisting loudly upon their right to work and earn food, 
raiment, and shelter for their bodies, as a substitute for the 
privilege of receiving these indispensable goods as uncertain 
doles bestowed by the hands of professional philanthropists in 
the name of organized charity. Who can blame the workers 
for preferring wages above alms? 

Our legislatures have been very slow to recognize the exist- 
ence of unemploymeat in our country. When they have recog- 
nized it, they have made no attempt to measure its magnitude 
or deal with it intelligently or effectively. Our efforts to deal 
with unemployment are still mainly confined to handing out 
bread and soup indiscriminately to all comers. The Romans dis- 
pensed bread and circuses to their unemployed. We have sub- 
stituted soup for circuses. That has been thus far our contri- 
bution toward the ultimate solution of the problem of unem- 
ployment. Whether we have improved upon the Roman form- 
ula for the treatment of the unemployed may be determined only 
by a careful statistical study of the relative merits of the Roman 
circus and of the American soup dispensed to the unemployed. 

Some of the States and the Federal Government have set 
up systems of employment offices to bring together the "jobless 
man" and the "manless job." It has often been asserted that 
these offices can not create work for the unempk^ed. Their 
work, however, has exactly the same effect if they bring an un- 
employed man into a job that would have remained unoccupied 
without their efforts. A public employment office, even a very 
inefficient one, is a recognition on the part of the public of a 
solemn, tragic fact and of great fundamental principle — the fact 
of unemployment and the principle of public responsibility 
therefor. These public offices should be vigorously supported 



PROBLEMS OF LABOR 177 

by the people until they have driven all competing, profiteering 
private employment offices out. of existence. 

The unemployed who want work should be given the op- 
portunity to do productive work through public employment 
offices ; the unemployed who want to live and loaf at the expense 
of the industrious should be made to work on farm colonies and 
in penal institutions. The trouble with our public employment 
officers is the trouble which afflicts many if not most of our in- 
stitutions. We have recognized the principle and defaulted in 
the interest. Our people are not willing to give of their time 
and effort to bring and keep the offices up to a high standard of 
efficiency. 

The United States has no hereditary governing classes; the 
business of government falls upon the masses. Class govern- 
ment, of the classes, by the classes, and for the classes is rela- 
tively simple and easy to effect. There is nothing more difficult 
than to bring to pass mass government, of the people, by the 
people, and for the people. The American people are an in- 
genious and an ingenuous people. We have done more to sub- 
stitute automatic machinery and devices for men and brains than 
any other people on earth. Whenever we see a man working 
at a steady job we want to devise a machine to take his place. 
We yearn for perpetual motion, social, political, economic, re- 
ligious, spiritual, and physical. We want devices which, when 
once set going, will go on forever, requiring no further atten- 
tion or intelligent effort on our part. We elect legislatures 
which enact statutes making it unlawful to do wrong, and we 
go on our way rejoicing. When the wrongdoers continue to do 
wrong, we set up a board or commission to put a stop to the 
wrongdoing. When the board or commission fails to work, we 
set up another automatic device to make it work, and so on. 

But even if we had a complete and smoothly working na- 
tional system of employment offices we would not have solved 
the problem of unemployment. Periodical, seasonal, and even 
weekly and diurnal irregularities in employment would exist. 
It is immensely more important that we smooth out the irregu- 
larities in employment than that we establish employment offices. 
Prevention is worth a thousand tons of cure. At first blush 
it might seem that every industry should be self-supporting, 
that is, every industry should pay at least a living annual wage— 
a wage sufficient to keep a worker and his family throughout 
the year, even though the industry should run for only a few 



278 SELECTED ARTICLES 

months in the year. - This idea sounds attractive but it is im- 
practicable. If we try to put it into effect the canning indus- 
tries would be destroyed along with many other useful indus- 
tries which operate for only a part of the year. It is, however, 
perfectly practicable to combine seasonal industries and indus- 
tries having considerable irregularity in employment so as to 
make employment much more stable than at present. But even 
when employment is stabilized as far as possible, there will still 
exist recurrent unemployment. 

Unemployment Insurance 

How much unemployment there is to-day, nobody can say. 
What may be called "the irreducible minimum" of unemploy- 
ment can not even be guessed at. No complete and accurate 
survey of the amount and significance of unemployment in this 
country has ever been made, and no funds have ever been ap- 
propriated by Congress to enable such a study to be undertaken 
although the importance of current information on this subject 
can scarcely be overemphasized. We shall never know the ex- 
tent of unemployment until we have unemployment insurance. 
Heretofore I have opposed unemployment insurance on the 
ground that we have no adequate machinery to carry such in- 
surance into effect. It seemed to me necessary that a very com- 
plete system of employment offices should be established before 
we ventured to enact unemployment insurance legislation. I 
have been driven to the conclusion, however, that unemploy- 
ment insurance is absolutely necessary if for no other purpose 
than to secure a complete registration of all unemployed per- 
sons throughout the country. When we think of the disastrous 
consequences to the worker and to society resulting from unem- 
ployment, the millions of dollars necessary to carry into effect 
an unemployment insurance law seem a small price to pay for 
the information requisite for us to deal with this great evil. 

The Department of Labor Statistics in Great Britain knows 
each week the number of unemployed ijti each industry through- 
out Great Britain and Ireland. This information is invaluable 
to the British Government in dealing with the tremendous 
problems of reconstruction and the reemployment of demobil- 
ized soldiers, sailors, and civilians. Had we been as deeply 
engaged in the war as Great Britain, our country to-day wouIH 
be overwhelmed with disaster because of our inability to direct 
our industrial energies so as to absorb the enormous masses of 



PROBLEMS OF LABOR 179 

workers coming in part from our disbanding Army, but in the 
mam, of course, from specialized munition factories. Even as 
it is, unemployment has reached very serious proportions in 
different sections of our country, and it will undoubtedly grow 
worse before it grows better. In the meantime, we know 
nothing quantitatively about unemployment. All we know is 
that it is serious in extent and unforetellable in its possible 
results. 

I do not w T ant to see an unemployment insurance law, 
modeled after the British act, enacted in this country. It is 
very clear to me that industry should be made as nearly self- 
supporting as possible. Unemployment is the one hazard that 
is purely industrial, and it causes more distress and social de- 
moralization than any other hazard affecting the life and health 
of the workers. Yet nothing has been done about it by indus- 
try and next to nothing by society. The whole burden falls 
upon the individual worker except for the feeble, sporadic help 
given by a few trade-unions. Industry should be made to pay 
the costs of production. A part of the costs of production 
under the present organization of industry is unemployment 
tempered by underemployment and overemployment. It would 
be very simple to put the money costs of unemployment upon 
industries on an insurance plan. The premium rate would be 
lowest for the most stable industries and highest for those in 
which employment is regularly irregular. 

The cost of organizing and conducting unemployment in- 
surance must be put upon industries approximately in propor- 
tion to the extent of unemployment in each industry. For ex- 
ample, seasonal industries like tomato canning, fish canning, and 
the like, should pay a greater proportional part of the tax or 
premium for unemployment benefits than industries working 
the year round. In addition to unemployment insurance taxes 
or premiums, industry should be required to pay a "dismissal 
wage" to employees discharged for no fault of their own. It 
will require much careful thought and expert draftsmanship 
to shape up a measure that will hold water, but every thing 
that is worth doing at all is difficult. 

I do not expect unemployment insurance legislation to be 
enacted immediately, but it is bound to come. It is remarkable 
that industries have not been held accountable or even con- 
nected with the only purely industrial hazard that we have. The 
attention of employers must be directed to the dangerous and 



180 SELECTED ARTICLES 

demoralizing effects of unemployment and the responsibility of 
industry therefor. When employers realize the dangers in- 
volved and their responsibilities we may trust to their patriotism 
and fair-mindedness to apply the proper remedy. 



A PERMANENT PROGRAM FOR STABILIZING 
EMPLOYMENT IN NEW YORK STATE 1 

The New York State Reconstruction Commission, under the 
chairmanship of Abram I. Elkus, submitted on June 17, 1919, 
a report to the Governor, suggesting the desirability of framing 
a permanent program for dealing with the problem of unem- 
ployment in the State, and making certain well-defined recom- 
mendations for developing and putting into effect such program. 
The commission found that "the chronic unemployment which 
exists in the State" independent of business conditions is 
attributable in the main to two factors (1) the physical impos- 
sibility, in the present industrial organization, of connecting 
workers with jobs without loss of time in the interim, and (2) 
the seasonal fluctuations in the demand for labor in the several 
industries. It was also found that in addition to these con- 
tinuous and normal causes of unemployment there are varia- 
tions in the demand for labor in one or another industry due 
to the incessant play of business conditions and to cyclical de- 
pressions of the whole industrial system, caused by fluctuations 
in gold and silver, misdirection of productive energy, under- 
consumption, excessive competition, etc. 

While not condemning the private employment exchanges, 
which the commission admits have a mission to perform, as 
for instance in the case of schools, colleges, and business col- 
leges which conduct employment bureaus for the benefit of their 
graduates, it is felt that for the great majority of employments 
the ideal condition will be attained only when the State system 
of exchanges becomes in effect the exclusive source of supply 
of labor. To this end it is believed the permanent legislative 
policy of the State should be carefully directed. The great 
problem to be worked out is to reduce to a minimum the loss 
of time which now results in connecting the worker and the 
job and this may be accomplished by establishing a system of 

1 Monthly Labor Review. U. S. Bureau of Labor Statistics. 9:245-8. 
November, 1919- 



PROBLEMS OF LABOR iSi 

labor exchanges which would record in a single unified register 
every vacancy and every seeker for work. The commission feels 
that it is impossible to secure "even an approach to this condi- 
tion under the system of competitive privately operated, fee- 
charging employment agencies" and that it must be done by a 
system of public employment offices established on an adequate 
basis. More vigorous supervision of private agencies is sug- 
gested; they should be licensed regardless of locality "and 
should be required to sign a penal bond, the license to be for a 
short period of time and to embody provision for the revoca- 
tion or nonrenewal of the license in the event of improper con- 
duct on the part of the licensee." 

In connection with the development of a State employment 
system and the control and gradual supplanting of most of the 
private employment agencies, a condition which the commis- 
sion believes would be brought about by the competition of the 
free public agencies, there are a number of problems suggested 
as needing careful study by the State industrial commission, 
with a view to working out a definite program. These are — 

i. The organization of the labor market to bring about extensive 
dovetailing of winter and summer trades and to stimulate the use of 
subsidiary trades. 

2. Directing labor to new occupations when changes of industrial 
structure result in displacement from chosen occupations. 

3. Reserving certain places in industry for older men and women 
and leaving the younger generation the task of finding and forcing fresh 
openings for themselves. 

4. Concentrating attention upon the need for industrial training, in- 
cluding "vestibule" or preliminary training, training in plants to in- 
crease efficiency while gainfully employed, and training in trade and 
business schools. This should be done with the State and local depart- 
ments of education and with private educational institutions. An annual 
bulletin should be published, similar to that published by the Clearing 
House for War Time Training for Women, describing the courses of 
training in schools, trade schools, colleges, etc., for those seeking a vo- 
cational education. 

5. Directing boys and girls away from "blind alley" employment, 
and issuing monthly bulletins based on the most complete figures which 
can be obtained. 

6. Testing periodically and comprehensively the amount of unemploy- 
ment. 

7. In cases of seasonal employment or depression, urging employers 
to shorten hours rather than discharge employees. 

The commission points out in some detail the difficult and 
somewhat unsatisfactory result which would appear to follow 
the adoption of a definite plan for State control of public works 
construction by which projects contemplated by the State or by 
municipalities might be so handled as to furnish employment to 
the largest possible number in times of industrial depression. It 
is at best a new and untried method of public works administra- 



i&2 SELECTED ARTICLES 

tion and finance, and the commission states that it has not felt 
justified in recommending its adoption as a means of ameliorat- 
ing the severity of unemployment conditions. 

For the present it would seem that the most that can practically be 
done is to impress upon the various State departments and the local 
authorities the desirability of planning public improvements upon a long- 
term basis, and to designate some authority in the State to keep currently 
in touch with the execution of the several local and State programs', 
with a view to urging upon the city, county, and State authorities, and 
where necessary, upon the State legislature, prompt action in pushing 
forward the work outlined with especial vigor whenever industrial de- 
pression threatens. 

Along this line the commission recommends that — 

(i) In the absence of a single recognized State public works di- 
rector the legislature authorize and require the State industrial com- 
mission through the bureau of employment to obtain during the first three 
months of each year from the several State departments and localities in- 
formation regarding all public works projected and under construction, 
and to publish this information annually in April, in a summary form 
similar to that adopted this year by the reconstruction commission in 
its report to you on public improvements. (2) An informal body be set 
up consisting of representatives of the State departments principally con- 
cerned with public works including the State engineer, superintendent of 
public works, commissioner of highways, State architect and conserva- 
tion commissioner, and of representatives of the State industrial com- 
mission, which shall study the data thus obtained in conjunction with the 
data regarding employment and business conditions currently gathered by 
the State industrial commission and shall call in April or May an annual 
conference of all public works authorities throughout the State to discuss 
engineering, financial, employment, and other common problems and to 
endeavor by counsel and suggestion to effect the vigorous prosecution of 
all works already planned for and financed, and the prompt financing of 
works projected whenever severe business depression and unemployment 
threaten. At this conference arrangements should be made by the rep- 
resentatives of the bureau of employment with the various public works 
authorities whereby the bureau could be instrumental in supplying men to 
officials and contractors when work actually commences. Were such a 
board instituted, its operations over a period of a few years would dis- 
close, more effectively than any speculation which may now be advanced 
by your commission, precisely what if anything may be accomplished by 
more positive and compulsory action of the State in securing an actual 
deferment of public works construction against periods of depression. 

Even if such a plan were adopted and put into effect a cer- 
tain amount of unemployment would still persist. Unemploy- 
ment insurance has been suggested to remedy this situation, 
but the commission hesitates to recommend such a plan for 
New York State, at least until the State employment service is 
greatly extended to a point where it becomes practically a 
monopoly and is so efficient as to be capable of administering 
a law which involves complete supervision of all employment 
throughout the State. 

Summary of Recommendations 

The definite recommendations submitted to the governor by 
the commission on reconstruction are thus summarized in the 
report : 



PROBLEMS OF LABOR 183 

1. Continue to develop the State employment service look- 
ing toward an ultimate State monopoly in this field, excepting 
possibly a small number of union agencies and private agencies 
supplying service of a personal and professional character. 

2. Revise and introduce the bill drawn up by the industrial 
commission providing for licensing at a fee of $250 of all pri- 
vate employment agencies. The State industrial commission 
should license all agencies excepting those in first class cities. 
In such cities the licensing should be done locally, but the State 
should divide all fees equally with the cities. The State's fees 
should go into a fund for support of the bureau of employment. 

3. Enforce the present State law providing for the main- 
tenance of standard registers and the submission of figures by 
private employment agencies, extend the supervision of private 
employment agencies, and draw up legislation opening the books 
of private exchanges to audit by the State bureau of employ- 
ment. 

4. Direct the industrial commissioner, through the bureau 
of employment, to develop a program which should cover the 
following subjects: 

(a) The organization of the labor market to bring about 
extensive dovetailing of winter and summer trades and to stimu- 
late the use of subsidiary trades. 

(b) Directing labor to new occupations when changes of 
industrial structure result in displacement from chosen occupa- 
tions. 

(c) Reserving certain places in industry for the older men 
and women, and leaving the younger generation the task of find- 
ing and forcing fresh openings for themselves. 

(d) Concentrating attention upon the need for industrial 
training, including "vestibule" training where such training 
does not lead to blind-alley employment, training in plants to 
increase efficiency while gainfully employed, and training in trade 
and business schools. Issue in cooperation with the State and 
city departments of education annual bulletins outlining the 
courses of training in schools for all schools, colleges, etc., open 
to persons seeking vocational education. 

(e) Directing boys and girls away from "blind-alley" em- 
ployment. 

(/) Testing periodically and comprehensively the amount 
of unemployment and publishing bulletins based on the most 
complete figures which can be obtained. 



i84 SELECTED ARTICLES 

(g) In cases of seasonal employment or depression, urging 
employers to shorten hours rather than discharge employees. 

5. Authorize and require the State industrial commission 
through the bureau of employment to obtain during the first 
three months of each year from the several State departments 
and localities current information regarding all public works 
projected and under construction and to publish this informa- 
ton annually in April in summary form. 

6. Appoint an informal committee composed of represen- 
tatives of the State departments principally concerned with pub- 
lic improvements and of the State industrial commission to study 
data thus obtained in conjunction with data regarding employ- 
ment and business conditions currently gathered by the State in- 
dustrial commission, and to call in April or May an annual 
conference of all public works authorities throughout the State 
to discuss engineering, financial, employment, and other com- 
mon problems. This committee should vigorously prosecute 
all public improvements whenever business depression and un- 
employment threaten, and report upon the need, if any r of com- 
pulsory action to secure the deferment of public works and the 
establishment of public works reserves. 



TRADE UNIONISM 

PROPORTION OF THE ORGANIZED 1 

What is the Percentage of the Organized Workers in the Organ- 
izable Occupations of the United States? 

The latest census gives the number of persons "in gainful 
occupations" as : 

Males 30,000,000 

Females 8,000,000 

Total 38,000,000 

This total was thus classified : 

Pet 

Agriculture 12,650,000 33.2 

Domestic and General Service 3,770,000 9.9 

Professional Service 1,700,000 4.4 

Public Service 460,000 1.2 

Clerical Service 1,700,000 4.6 

Trade 3,600,000 9.5 

Total 23,900,000 62.8 

Extracting Minerals 965,000 

Manufacturing and Mechanical Work. 10,658,000 
Transportation 2,637,000 

Total 14,100,000 37.2 

Grand Total 38,000,000 100 

In no country are workers of the first group (23,900,000) or- 
ganized to any extent in trade unions. 

In the second group (14,100,000) besides wage workers there 
are emplo}^ers big and little, the higher salaried employees, young 
persons learning trades, unskilled, unassimilated foreigners, 
craftsmen in small industries or in non-industrial communities 
and numerous persons self-employed. Only estimates can be 

1 From the Amalgamated Journal. — Iron, Steel and Tin Workers, 
Pittsburgh, Pa. November, 19 19. 



186 SELECTED ARTICLES 

formed £or the numbers in these classifications, which either 
have interests apart from those of the wage workers or in all 
countries are unorganizable. 

Number of organizable men and women in industry in this 
country is 8,000,000. The American Federation of Labor and 
the railroad brotherhoods now count up 4,500,000. This would 
give 55 per cent, of the total 8,000,000 organizable organized. 
But if we have 7,000,000 instead of 8,000,000, the percentage of 
the organized becomes 63 (4,500,000 out of 7,000,000) ; and if 
6,000,000, the percentage is 75 (4,500,000 out of 6,000,000). 

But, come to the practical question. In any particular indus- 
trial contest between buyers and sellers of labor power the pro- 
portion of the organized to the unorganized in all the extent of 
America has little bearing. The outcome of any such struggle 
depends upon the number of the unorganized and unemployed 
who are qualified to work at the occupations affected and reach- 
able within a practicable hiring area and willing to undermine 
union conditions. It is to be kept in mind that in every com- 
munity masses of the unorganized are union sympathizers, 
showing themselves within the sphere of union influence when- 
ever there is a strike. Statistics fail to enumerate these potential 
unionists. 

The wage conflict being most active in industrial centers, the 
workers in them are in general thoroughly organized. The more 
highly skilled trades in many American communities have an 
effectiveness in unionized labor of 100 per cent. 

In the light of the foregoing analysis of the census statistics 
the American trade unionists can certainly claim for industry 50 
per cent, organized as it is to be kept in mind, too, that in the 
A. F. of L. statistics there are included neither the independent 
unions nor the I. W. W. 

Under-rating the numerical strength of the American trade 
union movement is frequently accompanied by an over-rating of 
the British movement. A member of an American employers' 
commission was recently quoted in the London Times as saying: 
"While your workers are 85 per cent, organized in unions, the 
trade unions of the United States have only about 10 per cent, 
so organized," and the impression that the proportion given to 
Britain is a fact seems to prevail generally. 

But the statistics for Britain do not show 85 per cent, of "the 
workers" organized. Far from it. Mr. H. G. Williams, in a 
carefully prepared paper read at the annual convention of the 



PROBLEMS OF LABOR 187 

British Industrial League in August last, estimated that in 1906 
there were in the Kingdom 19,420,000 "occupied persons," of 
whom 1,000,000 were income tax payers, the remaining 18,420,000 
having incomes under £160 ($800) a year. For the latter the 
groupings were: 

Agriculture 1,690,000 

Domestic service 2,050,000 

Commercial, professional : 2,240,000 

Persons working for themselves 3,920,000 

Manufacturing trades 6,410,000 

Railways 610,000 

Mines and quarries 1,000,000 

Casual labor 500,000 



18,420,000 

The four classifications last named in the table number 8,520,- 
000. If, as reported at the Derby Trade Union Congress in 191 8, 
the number of British trade unionists was 4,500,000, and the 
foregoing table as a whole warrants an estimate of about 9,000,- 
000 persons organizable, the proportion organized in Great 
Britain is somewhere about 50 per cent. 



THE EMPLOYER'S VIEWPOINT 1 

Representing as we do on this Commission, the employers' 
side, we are at one with the other members of our Federal 
Commission who represent the general public, and also with 
those representing organized labor, in believing that under mod- 
ern industrial conditions, collective bargaining, when fairly and 
properly conducted, is conducive to the best good of the em- 
ployer, the worker, and society. We find that there are many 
enlightened employers who concur in this view, who in the past 
recognized and dealt with organized labor, but who now refuse 
to do so, and who, under proper conditions, w T ould willingly con- 
tinue to engage in collective bargaining. With good cause, in 
our opinion, however, they place the responsibility for their re- 
fusing to do so at the door of organized labor. There is an 
abundance of available testimony in our records to show that 

1 From report of Harris Weinstock, S. Thurston Ballard, Richard H. 
Aishton, members of U.S. Commission on Industrial Relations, 191 5. 



i8ft SELECTED ARTICLES 

many employers are frightened off from recognizing or dealing 
with organized labor for fear that to do so means to put their 
heads in the noose and to invite the probability of seriously in- 
juring, if not ruining, their business. 

The prime objection that such employers have to recognizing 
and dealing with organized labor is the fear of — 

(a) Sympathetic strikes. 

(b) Jurisdictional disputes. 

(c) Labor union politics. 

(d) Contract breaking. 

(e) Restriction of output. 

(/) Prohibition of the use of nonunion made tools and 
materials. 

(g) Closed shop. 

(h) Contests for supremacy between rival unions. 

(i) Acts of violence against nonunion workers and the 
properties of employers. 

(/) Apprenticeship rules. 

While we have found many sinners among the ranks of the 
employers, the result of our investigation and inquiries forces 
upon us the fact that unionists also can not come into court 
with clean hands ; that this is not a case where the saints are 
all on one side and the sinners all on the other. We find saints 
and sinners, many of them, on both sides. 

The hope of future industrial peace must lie in both sides 
using their best endeavors to minimize the causes that lead to 
the growth of sins and sinners on each side of the question. 

Sympathetic Strikes 

Taking up seriatim the objections offered by many employers 
to recognizing and dealing with organized labor, we come first to 
that of the sympathetic strike. The employer contends, and we 
find ourselves in sympathy with his contention, that it is a rank 
injustice to subject him to a strike of his employees who have 
absolutely no grievances, to stop work because some other group 
of workers, possibly at a remote point, have a real or fancied 
grievance against their own emplo}^er, especially when such 
stoppage of work may not only inflict a very serious loss, but 
may mean ruin to the enterprise of the innocent employer, thus 
making it, in violation of all the equities, a clear case of punish- 
ing the many innocent for the one or the few who may be guilty, 
who were party to the original dispute. 



PROBLEMS OF LABOR 189 

Jurisdictional Disputes 

The employer further points out that not only is his business 
liable to be ruined by the sympathetic strike, but, more especially 
in tlie building trades, is he likely to become an innocent victim 
of jurisdictional disputes for which he is in no wise responsible 
and over which he has absolutely no control. 

Sidney and Beatrice Webb point out that — 

It is no exaggeration to say that to the competition between overlap- 
ping unions is to be attributed about nine-tenths of the ineffectiveness of 
the trade union world. 1 

Innumerable instances have occurred where jurisdictional strikes have 
lasted for months and sometimes for years. 2 

In 1910 the secretary of the bricklayers said : 

Our disputes with the operative plasterers' union during the past year 
have taken thousands of dollars out of our international treasury for the 
purpose of protecting our interest. The loss in wages to our members has 
amounted to at least $300,000. The loss to our employers has been up in 
the thousands, also. 2 

Sidney and Beatrice Webb again point out that in the indus- 
tries of Tyneside, within a space of 35 months, there were 35 
weeks in which one or the other of the four most important 
sections of workmen in the staple industry of the district, abso- 
lutely refused to work. This meant compulsory idleness of tens 
of thousands of men, the selling out of households, and the 
semistarvation of whole families totally unconcerned with the 
disputes, while it left the unions in a state of weakness from 
which it will take years to recover. 

That wise and far-seeing labor leaders keenly appreciate the 
great wrongs inflicted not only upon the employers, but upon the 
workers themselves, by virtue of cessation of work in jurisdic- 
tional disputes, is emphasized by the following extracts from 
the report of Mr. Samuel Gompers, President of the American 
Federation of Labor, at its convention in 1902 : 

Beyond doubt, the greatest problem, the danger which above ail others 
is threatening not only the success but the very existence of the American 
Federation of Labor, is the question of jurisdiction. Unless our affiliated 
national and international unions radically and soon change their course. 
we shall, at no distant date, be in the midst of an internecine contest un- 
paralleled in any era of the industrial world, aye, not even when workmen 
of different trades were arrayed against each other behind barricades over 
the question of trade against trade. They naturally regard each other 
with hatred, and treat each other as mortal enemies. 

There is scarcely an affiliated organization which is not engaged in a 
dispute with another organization (and in some cases, with several organ- 
izations) upon the question of jurisdiction. It is not an uncommon occur- 
rence for an organization, and several have done so quite recently, to so 

1 — Industrial Democracy, vol. 1, p. 121. 

3 — The Bricklayer and Mason, Feb., 191 1, f. 127. 



iqo SELECTED ARTICLES 

change their laws and claims to jurisdiction as to cover trades never con- 
templated by the organizers, officers, or members; never comprehended by 
their titles, trades of which there is already in existence a national union. 
And this without a word of advice, counsel, or warning. 

I submit that it is untenable and intolerable for an organization to 
attempt to ride rough-shod over and trample under foot rights and juris- 
diction of a trade, the jurisdiction of which is already covered by an ex- 
isting organization. This contention for jurisdiction has grown into such 
proportions, and is fought with such an intensity as to arouse many bitter 
feuds and trade wars. In many instances employers fairly inclined for 
organized labor are made innocently to suffer from causes entirely beyond 
their control. 

Labor Union Politics 

The third objection of employers to recognizing and dealing 
with organized labor is the risk they run, especially in the build- 
ing trades, where power to declare a strike is concentrated in 
the hands of a business agent, of finding themselves at the mercy 
of either a corrupt business agent or one who, for the sake of 
union politics, is endeavoring, in order to perpetuate himself in 
office, to make capital at the expense of the innocent employer 
by making unwarranted and unreasonable demands against the 
employer. 

Contract Breaking 

The fourth reason offered by the employers for refusing to 
recognize or to deal with organized labor, is its increasing un- 
reliability in keeping trade agreements. To give one case in 
point, our record gives the story, in undisputed statement pub- 
lished in the United Mine Workers' Journal, which is the official 
organ of the United Mine Workers of America, written by 
Mr. W. O. Smith, ex-Chairman of the Executive Committee of 
the Kentucky District of United Mine Workers of America, in 
which Mr. Smith, among other things, says: 

Because of the indifference of the conservative members of our unions, 
and the activity of the radical element which is responsible for the greatest 
menace which' has ever threatened the United Mine Workers of America, 
the local strike, during the past two or three years the international, as 
well as the district and subdistrict officials, have been confronted with 
many perplexing problems, some of which seem to threaten the very life of 
the organization. But I believe I am safe in saying that no problem has 
given them so much concern as the problem of local strikes in violation 
of agreements. 

Thousands of dollars are expended every year in an effort to organize 
the 250,000 nonunion miners in the United States, while hundreds of our 
members go on strike almost every day in absolute, unexcusable violation 
of existing agreements. 1 

This criticism comes not from an employer, but from an 
ardent, earnest unionist, in high standing in his organization. 
Corroborating the statement of Mr. Smith, comes a statement 

1 — New York Hearings, U. S. Commission on Industrial Relation, 
PP- 2750-51. 



PROBLEMS OF LABOR 191 

published in Coal Age of December 20, 1913, issued by the Asso- 
ciation of Bituminous Coal Operators of Central Pennsylvania, 
addressed to Mr. Patrick Gilday, President of District No. 2, 
U. M. W. of A., Morrisville mines, Pa., dated Philadelphia, De- 
cember 12, 1913, in which, among other things, the following 
appears : 

Whereas, Rules 12 and 13 of said agreement provide, ''that should dif- 
ferences arise between the operators and mine workers as to the meaning 
of the provisions of this agreement or about matters not specifically men- 
tioned in this agreement, there shall be no suspension of work on account 
of such difference, but an earnest effort be made to settle such differences 
immediately." Whereas, notwithstanding the fact that Rule 15 provides 
the right to hire and discharge, the management of the mine and the direc- 
tion of the working forces are vested exclusively in the operator, the 
United Mine Workers of America have absolutely disregarded this rule, in 
that they have at numerous times served notices on substantially every 
operator belonging to our Association, that unless all the employees work- 
ing for such operators should become members of the union on or before 
certain dates mentioned in said notices, that they, the Mine Workers, would 
close or shut down the operators' respective mines, and in many instances 
did close the mines for this reason, and refused to return to work unless 
such nonunion employees were discharged. This conduct is in direct viola- 
tion of the contract, and specifically interferes with and abridges the right 
of the operator to hire and discharge; of the management of the mine, 
and of the direction of the working forces; this conduct in violation of 
contract on the part of the Mine Workers, as well as that mentioned in 
the preceding paragraph, has resulted in more than one hundred strikes 
during the life of our scale agreement. 1 

Numerous other illustrations could be given from the records 
of the Commission, showing that there are other instances where 
unions did not observe their contracts, tending to make, in the 
minds of many employers, a character for all unionism, and thus 
increasing their hesitancy in recognizing and dealing with unions. 

Restriction of Output 

Not least among the reasons given by fair-minded employers 
for refusing to recognize or deal with labor unions, is the fact 
that many unions stand for a limited output, thus making among 
their workers for the dead level, and thereby making it impossi- 
ble for the union employer successfully to compete with the 
nonunion employer, who is not faced with such handicap. 

British industrial conditions are cursed with the practice of 
limited output, as compared with the absence of this practice in 
industrial Germany. As a consequence, Germany, in time of 
peace, has industrially outrun Great Britain by leaps and bounds. 

The British unionist, by practicing limited output, has thus 
played directly into the hands of his keenest industrial com- 
petitor, the German. 

1 — New York Hearings, U. S. Commission on Industrial Relations. 
pp. 2061-2. 



192 SELECTED ARTICLES 

The records of the Commission also show that organized 
labor, almost as a unit, is very strongly opposed to the introduc- 
tion in industry of what has become known as Scientific Man- 
agement, or Efficiency Methods. In relation to this phase of the 
problem, we find ourselves at one with the statement made and 
the opinions expressed by Mr. Louis D. Brandeis before the 
Commission at Washington, in April, 1914, who, when invited 
to express his opinion on the question of efficiency standards, 
scientific management, and labor, among other things, said 

My special interest in this subject arises from the conviction that, in 
the first place, working men, and in the second place, members of the 
community generally, can attain the ideals of our American democracy 
only through an immediate increase and perhaps a constant increase, in 
the productivity of man. * * * Our ideals could not be attained unless 
we succeed in greatly increasing the productivity of man. * * * The 
progress that we have made in improving the conditions of the working 
man during the last century, and particularly during the last fifty years, 
has been largely due to the fact that intervention or the introduction of 
machinery has gone so far in increasing the productivity of the individual 
man. With the advent of the new science of management has come the 
next great opportunity of increasing labor's share in the production., and 
it seems to me, therefore, of the utmost importance, not only that the 
science should be developed and should be applied as far as possible, but 
that it should be applied in cooperation with the representatives of organ- 
ized labor, in order that labor may now, in this new movement, get its 
proper share. 

I take it that the whole of this science of management is nothing more 
than an organized effort, pursued intensively, to eliminate waste. * * * 
It is in the process of eliminating waste and increasing the productivity of 
man, to adopt those methods which will insure the social and industrial 
essentials, fairness in development, fairness in the distribution of the 
profits, and the encouragement to the working man which can not come 
without fairness. 

I take it that in order to accomplish this result, it is absolutelj- essen- 
tial that the unions should be represented in the process. * * * When 
labor is given such a representation, I am unable to find anything in 
Scientific Management which is not strictly in accord with the interests of 
labor, because it is nothing more than fair, through the application of 
these methods which have been pursued in other branches of science, to 
find out the best and the most effective way of accomplishing the result. 
It is not making men work harder — the very effort of it is to make them 
work less hard, to accomplish more by what they do, and to eliminate all 
unnecessary motion, to give special effort and special assistance to those 
who, at the time of the commencement of their work, are mostly in need 
of the assistance because they are less competent. 

* *■ * As I view the problem, it is only one of making the employer 
recognize the necessity of the participation of representatives of labor in 
the introduction and carrying forward of the work, and on the other 
hand, bringing to the working man and the representatives of organized 
labor, the recognition of the fact that there is nothing in Scientific Man- 
agement itself which is inimical to the interests of the working man, bur 
merely perhaps the practices of certain individuals, of certain employers or 
concerns who have engaged in it. 

I feel that this presents a very good opportunity for organized labor. 
It seems to me_ absolutely clear, as Scientific Management rests upon the 
fundamental principles of advance in man's productivity, of determining 
what the best way was of doing a thing, instead of the poor way, of a 
complete coordination and organization of the various departments of 
business, that the introduction of Scientific Management in our businesses 
was certain to come; that those who oppose the introduction altogether 
are undertaking a perfectly impossible task; and that if organized^labor 
took the position of absolute opposition, instead of taking the position of 



PROBLEMS OF LABOR 193 

insisting upon their proper part in the introduction of this system, and 
the conduct of the business under it. organized labor would lose its great- 
est opportunity, and would be defeating the very purpose for which it 
exists. 

On being asked the question what, in his opinion, would be 
the status of unionism in the event of Scientific Management 
becoming a common industrial condition, Mr. Brandeis said : 

I think there would be a great deal left for unionism to do, and do not 
think the time will come when there will hot be, as long as there is a 
wage system in existence. * * * I do not feel that we have reached 
the limit of the shorter day, certainly not in some employments, nor do I 
think we have reached the limit of the higher wage; certainly we have 
not reached the limit of the best conditions of employment in many indus- 
tries. 

All of these subjects are subjects which must be taken up, and should 
be taken up by the representatives of the men and women who are par- 
ticularly interested. There will be work for unions to do as long as 
there is a wage system. 

Prohibition of Use of Nonunion Made Tools and Material 

The sixth reason offered by employers for refusing to rec- 
ognize or to deal with organized labor, is that when they do so 
they are often not permitted to use nonunion made tools or 
materials, thus placing upon themselves a burden and a hardship 
from which nonunion employers are free, and thus also laying 
themselves liable to get into all sorts of controversies with the 
union, which are vexatious, annoying, time-losing, and, fre- 
quently, most costly, as they sometimes lead to grave and serious 
strikes. 

Closed Shop 

The seventh reason why many employers refuse to recognize 
or to deal with organized labor (and among these may be men- 
tioned the employers of large bodies of workers who have pre- 
viously had trade agreements with organized labor) is the matter 
of the closed shop. 

Many such employers are quite willing to .recognize and to 
deal with unions upon a tacit or written open shop agreement, 
but they have no confidence, based on their previous experience, 
that an open shop agreement will be respected by the unions. 
Such employers labor under the fear that, despite an open shop 
agreement or understanding, the union, at its first opportunity, 
will force them to compel the nonunion worker to join the union. 
Employers such as these are unwilling to place themselves in 
the position where the union can control them despite an open 
shop agreement or understanding, and, so to speak, put a pistol 
to their heads and command them in turn to command a non- 



194 SELECTED ARTICLES 

union worker, on pain of dismissal, to join the union. Such em- 
ployers feel that, having an open shop agreement or understand- 
ing, if, for any reason, a worker does not choose to join the 
union, they, as employers, should no more compel him to do so 
than they would compel him to join any particular fraternal 
society or religious body. They feel that if they are working 
under an open shop agreement or understanding, and such non- 
union worker is capable, efficient, and has rendered long and 
faithful service, that they are doing him and themselves a great 
injustice either to force him into a union or to discharge him 
because he will not join a union. 

Where an employer enters into an agreement with a union 
which does not stipulate that only union men shall be employed, 
but leaves the employer free to employ exclusively union men, 
or some union and some nonunion men as he may prefer, so 
long as he maintains for all men union conditions, in such 
an event the union has no right to demand that the nonunionist 
should be compelled by the employer to join the union or a strike 
will follow. For the union, under such conditions, to strike, as 
it has done notably in the Pennsylvania coal fields, and as 
pointed out also by W. O. Smith, ex-Chairman of the Executive 
Committee of the Kentucky District of the United Mine Work- 
ers of America, whose statements have been quoted herein, is a 
violation, on the part of the union, of its contract. 

It may be held that unionists working under an open shop 
agreement or understanding always reserve to themselves the 
right, for any reason or for no reason, to cease to work along- 
side of nonunion men, and that they further reserve the right to 
determine the psychological moment at which it is in their inter- 
est to cease work or to go on a strike because they will not work 
alongside of nonunion men. It is the fear of the likelihood of 
their doing this that frightens off many employers from recog- 
nizing or dealing with organized labor. They feel that even 
when they are operating under an open shop agreement or un- 
derstanding, which does not deny them the right to employ non- 
union men so long as they work under union conditions, they 
are working with a sword suspended over their heads by a 
slender thread, which may break at any moment, and are liable 
to have a strike on their hands at the most critical time, which 
may spell ruin for their business. Employers, as a rule, do not 
deem it a good business policy to invite such risks. 

An impressive example of this policy on the part of organ- 



PROBLEMS OF LABOR 195 

ized labor was brought out in the testimony taken by the Com- 
mission at Lead, S. D. Superintendent Grier of the Homestake 
Mining Company, Lead, S. D., at the hearing held by the Com- 
mission at that point in August, 1914, stated that he had recog- 
nized and dealt with the Lead City Miners' Union from 1877 to 
1909, with the understanding that they were at liberty to employ 
union or nonunion men as they preferred. Late in October, 1909, 
a resolution was published in the daily papers that on and after 
the 25th of November, 1909, members of the Federation would 
not work with those working for the Homestake Mining Com- 
pany who failed and neglected to become members of the union 
in good standing; and in consequence, on the 25th of November, 
the mine was closed down, and from that day on the company 
has not recognized nor dealt with organized labor. 

We are, however, of the opinion that where an employer 
enters into an agreement with a union which stipulates that only 
union men shall be employed, a thing which he has both a moral 
and a legal right to do, the nonunion worker, in that event, can 
have no more reason to find fault with the employer in declining 
to employ him, than a certain manufacturer would have if the 
employer, for reasons satisfactory to himself, should confine his 
purchases to the product of some other manufacturer. 

Contests For Supremacy Between Rival Unions 

Testimony has been given before this Commission indicating 
in more than one instance, that contests between rival unions, or 
factions of the same union, have led to strikes causing industrial 
unrest from which the worker as well as the employer, has suf- 
fered harm and loss. 

Acts of Violence Against Nonunion Workers and the 
Properties of Employers 

The ninth objection raised on the part of the employers 
against unionism, which has been substantiated abundantly by 
investigation and by testimony taken by the Commission, is the 
resort on the part of unionists to violence in labor troubles, and 
to the fact that unionists condone such violence when committed 
in the alleged interest of labor. 

The most notable case, of course, in modern industrial his- 
tory, is that of the Structural Iron Workers, which resulted in 
the plea of guilty on the part of the McNamara brothers, for the 
blowing-up of the Los Angeles Time Building, killing over 



iq6 SELECTED ARTICLES 

twenty innocent people, and which further resulted in Frank 
Ryan, the President of the Structural Iron Workers' National 
Union, and a group of other labor union officials, being convicted 
and sentenced to prison. 

As a matter of fact, the bringing into life of this United 
States Commission on Industrial Relations was due primarily 
to the long series of crimes committed at the instance of the 
Structural Iron Workers' Union, which culminated in the blow- 
ing-up of the Los Angeles Times Building, with its attendant 
loss of life of innocent citizens, and which aroused a state of 
public sentiment demanding that an investigation be made by 
an impartial Federal body, to inquire into the underlying causes 
of industrial unrest, the existence of which seemed to be evi- 
denced by the violent activities on the part of labor in various 
parts of the country. 

Vincent St. John, Secretary of the Industrial Workers of the 
World, in his testimony before the Commission on Industrial 
Relations at a public hearing in New York, said that he believed 
in violence when it was necessary to win. He said that if the 
destruction of property seemed necessary to bring results, then 
he believed in the destruction of property. 

A. Johannsen of California, State Organizer for the Build- 
ing Trades of California, and General Organizer for the United 
Brotherhood of Carpenters, in his testimony before the United 
States Commission on Industrial Relations at Washington in 
May, 1915, in speaking of the reelection of Frank Ryan, Presi- 
dent of the National Structural Iron Workers' Union, among 
other things thanked the Lord that the union had the courage 
to reelect him President after he had been convicted as a partic- 
ipant in the dynamiting crimes of the Structural Iron Workers. 
He further expressed the hope that it was true that the convicted 
dynamiters, after being re-elected to office by the Iron Workers, 
were met by a procession of applause at Fort Leavenworth while 
on their way to prison, and that President Ryan performed his 
official duties while there, and rendered his official reports as 
President of a union of 10,000 members and a part of the Amer- 
ican Federation of Labor. 

In contradistinction to the opinion of Mr. Johannsen, to the 
effect that he thanked the Lord that the union had the courage 
to reelect Frank Ryan President after he had been convicted as 
a participant in the dynamiting crimes of the Structural Iron 
Workers, we have the opinion of Dr. Charles W. Eliot, Presi- 
dent Emeritus of Harvard University, who, in his testimony 



PROBLEMS OF LABOR 197 

before the United States Commission on Industrial Relations at 
New York, January 29th, 1915, in referring to this very instance, 
said, in answer to the question as to how he regarded the action 
of the Structural Iron Workers' Union in reelecting Frank Ryan 
President after his conviction of crime, "As a serious moral 
offense against the community as a whole." 

Speaking about respecting court labor injunctions, Witness 
Johannsen said: 

I don't think the power of an injunction goes much beyond the cour- 
age of those who are enjoined. I think that if a person is convinced in 
his own mind and his own feelings that his case is just, that his demands 
for an increase of wages, or whatever the fight may be — if you think and 
feel you are right, why then go ahead. Never mind about those pieces of 
paper. 

On being asked whether he (Johannsen) believed that Frank 
Ryan, President of the Structural Iron Workers' National 
Union, and his associates, were innocent men railroaded to 
prison, he said that he did, and that he was satisfied they never 
committed any crime against labor or a better society, and were 
therefore unjustly convicted. This was his attitude, despite his 
attention having been called to the opinion and decision ren- 
dered by the Circuit Court of Appeals, including Judges Baker, 
Seaman, and Kohlsaat, against whose integrity and fairness no 
whisper had ever been heard, and who seemingly went into the 
evidence in the dynamiting cases most exhaustively and care- 
fully, and who, among other things, in their decision, said — 

The facts thus recited, as proven by the Government on the trial, may 
be mentioned in part as follows: Almost ioo explosions thus occurred, 
damaging and destroying buildings and bridges in process of erection 
where the work was being done by open shop concerns, and no explosions 
took place in connection with work of a similar character, where the work 
was done by closed shop concerns. * * * i n connection with this work 
of destruction, dynamite and nitro-glycerine was purchased and stolen, 
and various storage places arranged to conveniently store such explosives 
which were to be used in the destruction of property in the various States 
referred to. * * * Large quantities of dynamite and nitro-glycerine were 
at various times stored in the vaults of the Association at Indianapolis, 
and also in the basement of the building. * * * Four explosions oc- 
curred in one night at the same hour in Indianapolis, and explosions were 
planned to take place on the same night, two hours apart, at Omaha, Neb., 
and Columbus, Ind., and the explosions so planned did occur on the same 
night, at about the same time, instead of two hours apart, owing to the 
fact that one clock was defective. * * * All the dynamite and nitro- 
glycerine * * * including the expenses incident to the stealing of the 
dynamite, were paid out of the funds of the International Association, and 
these funds were drawn from the Association upon checks signed by the 
Secretary-Treasurer, John J. McNamara, and the President, Frank M. 
Ryan, plaintiff in error. 

The written correspondence on the part of many of the plaintiffs in 
error * * * furnish manifold evidence not only of understanding between 
the correspondents of the purposes of the primary conspiracy, but many 
thereof convey information or direction for the use of the explosives, 
while others advise of the destruction which has occurred, and each points 
unerringly not only to the understanding that the agency therein was that 
of the conspirators, but as well to the necessary steps in its performance 
of transporting the explosives held for such use. This line of evidence 



iq8 SELECTED ARTICLES 

clearly tends to prove, and may well be deemed convincing of the fact on 
the part of many, if not all, of the correspondents. 

Plaintiff Frank M. Ryan was President of the Association and of its 
Executive Board, and was active manager and leader of the contest, and 
policies carried on throughout the years of the strike and destructive ex- 
plosions in evidence. Letters written and received by him at various stages 
of the contest clearly tend to prove his familiarity with and management 
of the long course of destroying open shop structures, however guarded in 
expression. He was at the headquarters of the Association for the super- 
vision of operations periodically, usually two or three days each month, 
uniformly attended the meetings there of the Executive Board, and made 
frequent visits to the field of activities. * * * He signed all of the 
checks in evidence for payments for expenditures for purchase, storage 
and conveyance of explosives. * * * Many other letters in evidence, 
both from and to him, however disguised in terms, may well authorize an 
inference of his complete understanding of, and complicity for, the ex- 
plosions, both in plans and execution. 1 

Masses of testimony were filed with the Commission to 
prove that organized labor at times resorted to a policy of law- 
lessness. Among other documents may be cited a magazine un- 
der the title of A Policy of Lawlessness, a partial record of riot, 
assault, murder, and intimidation, occurring in strikes of the 
Iron Molders' Union, during 1904-5-6-7, published by the Na- 
tional Founders' Association, in which are given, as a partial 
list taken from court records, a great number of instances of 
violence on the part of labor unionists in labor disputes; and 
also a document published as a report, submitted by the Com- 
mittee on Labor Disputes of the Cleveland Chamber of Com- 
merce, entitled Violence in Labor Disputes, giving hundreds of 
instances where unionists had resorted to violence in labor 
troubles in that community alone. 

Mr. Luke Grant, special investigator for the United States 
Commission on Industrial Relations, in his report to the Com- 
mission on the National Erectors' Association and the Interna- 
tional Association of Bridge and Structural Iron Workers, says : 

Do they [the unions] believe in violence? They did not destroy prop- 
erty and they don't know who did. They probably adopted resolutions 
denouncing the unknown perpetrators, and offering a reward for then- 
arrest and conviction. The Western Federation of Miners, in convention. 
offered a reward for the arrest of the men who blew up the Independence 
depot in June, 1904, killing 14 men. _ Harry Orchard afterward confessed 
that he and Steve Adams did it, acting as agents for the officers of the 
union. 

In this way do union men collectively approve of violence, that few if 
any of them would individually permit. 

Referring to the industrial war between the National Erec- 
tors' Association and the Structural Iron Workers' Union, Mr. 
Grant continues to say: 

When the hopelessness of the situation became apparent to the union 
officials, resort was made to the destruction of property. Diplomacy was 
out of the question, so dynamite was tried. 

1 — Washington Hearings, May 19 15, U. S. Commission on Industrial 
Relations p. 1004-13. 



PROBLEMS OF LABOR 199 

The report of Luke Grant brings out the fact that the Struc- 
tural Iron Workers had no grievances against their employers 
in the matter of wages, hours, or working conditions. The only 
question at issue was that of the closed shop. To enforce the 
closed shop, the Structural Iron Workers seemed to feel them- 
selves justified in dynamiting over one hundred properties and 
destroying many innocent lives. 

Police Commissioner Arthur Woods, of the City of New 
York, in his testimony before the United States Commission on 
Industrial Relations, in May, 1915, at Washington, D. C, speak- 
ing of violence by labor unions, among other things said : 

The result of our investigation shows a course of procedure like this: 
There would be a strike and the strikers would retain some gunmen to do 
whatever forcible or violent work they needed. The employer, to meet this 
violence, would in a comparatively small percentage of cases, and not as 
many cases as the gunmen were employed on the other side, hire a private 
detective agency. The function that the gunmen were to perform was to 
intimidate the workers that were hired to take the place of the strikers. 
* * * There were three indictments for murder in the first degree. 

The question was asked Police Commissioner Woods in how 
far his investigations had warranted the statement that ap- 
peared in the New York Herald of May 14, 1915, reading as fol- 
lows: 

Several of the indictments mentioned assault upon members of the union, 
and in this connection District Attorney Perkins said last night that the 
reign of lawlessness was caused by union leaders who wished to perpetuate 
themselves in power, who hired assailants to assault contenders in their 
own unions for their places, and who used their union offices to extort 
blackmail under threats from employers. Seven men are indicted for as- 
sault in a riot for control of the union. Four men are indicted for hiring 
Dopey Benny's men to go to a nonunion factory and rough-house the em- 
ployees as they left, and wreck the plant. A dozen workers were wounded 
in that fight. 

Six union men are accused of extortion and assault In using violence 
to collect a fine of $100 upon an employer. Four others are accused of 
hiring the Dopey Benny band to shoot up a nonunion factory. Many 
shops were fired. The factory suffered a damage of $1000 and several 
persons were injured. Other indictments mentioned cases where the band 
was employed by union leaders to attack nonunion workers, to wreck fac- 
tories, and even to assault nonunion men who opposed the leaders. 
(pp. 964-5.) 

To all of the foregoing, Police Commissioner Woods re- 
plied, "That is the general line of things that we found." 

One of the ablest and clear-headed exponents of the cause of labor that 
testified before this Commission was Morris Hillquit of New York. In 
speaking of violence in labor troubles, he is quoted as saying, 1 that the 
resort to violence and lawbreaking was "ethically unjustifiable and tac- 
tically suicidal." Mr. Hillquit pointed out that wherever any group or 
section of the labor movement "has embarked upon a policy of 'breaking 
the law' or using 'any weapon which will win a fight,' whether such 
policy was styled 'terrorism,' 'propaganda' of the deed, 'direct action,' 
sabotage,' or 'anarchism,' it has invariably served to destroy the move- 

1 — Robert Hunter, Violence and the Labor Movement, p. viii. 



20o SELECTED ARTICLES 

ment, by attracting to it professional criminals, infesting it with spies, 
leading the workers to needless and senseless slaughter and ultimately en- 
gendering a spirit of disgust and reaction." 

Robert Hunter, commenting on the foregoing statement made 
by Morris Hillquit, says (p. viii) : 

It will, I think, be clear to the reader that the history of the labor 
movement during the last half century fully sustains Mr. Hillquit's posi- 
tion. 

Apprenticeship Rules 

The question of apprenticeships has led to much industrial 
strife and consequent industrial unrest, where unions have 
arbitrarily determined the number of apprentices that the em- 
ployer may take on. 

Where this practice has prevailed the union employer has, 
in competition with the nonunion employer, been seriously 
handicapped. The remedy for this evil lies obviously in a 
joint agreement under the direction of the proposed State In- 
dustrial Commissions, in which each side has an equal voice in 
determining the proper quota of apprentices to be employed. 

In conclusion, it is our desire to point out that organized 
labor is chargeable with its fullest share of creating causes of 
industrial unrest, because of its sympathetic strikes, its jurisdic- 
tional disputes, its labor union politics, its contract breaking, its 
resort to violence in time of trouble, its policy of limited output, 
and its closed shop policy. There is an abundance of evidence 
in the records of the Commission to show that organized labor 
is also guilty of intimidating courts, more especially the lower 
criminal courts, to deal lightly with labor offenders charged with 
criminal assaults in labor troubles; and that some judges, more 
especially in the lower courts, toady to organized labor for 
vote-getting purposes, and dismiss union labor men guilty 
of law breaking, or impose on them nominal penalties out 
of all proportion to the crimes committed. 

These various policies have brought about their fullest share 
among the workers, to say nothing of the injury inflicted on 
employers and on society, of poverty, suffering, wretchedness, 
misery, discontent, and crime. Organized labor will never come 
into its own, and will indefinitely postpone the day when its 
many commendable objects will be achieved in the broadest 
sense, until it will cut out of its program sympathetic strikes, 
until it can prevent cessation of work in jurisdictional disputes, 
until it can more successfully prevent labor union politics, until 
it can teach many in its rank and file to regard more sacredly 



PROBLEMS OF LABOR 201 

their trade agreements, until it can penalize its members for 
resorting to violence in labor disputes, and until it can make it 
a labor union offense to limit output. 

Organized labor may ask, "If we cut out the evil policies 
complained of from our program, what offensive and defensive 
weapons will be left us with which to protect ourselves against 
the unfair employer?" 

The answer is that when labor is effectively organized, it has 
two most powerful weapons at its command that the employer, 
as a rule, dreads and fears because of the great damage these 
weapons can inflict on him, namely, the strike and the primary 
boycott, both of which are within the moral and legal rights of 
the worker to use. 

Generally speaking, the evils complained of have been elim- 
inated from the program of the railway brotherhoods. As a 
consequence, railway managers do not hesitate to recognize and 
to deal with the railway unions, to their mutual advantage and 
satisfaction, with the result that collective bargaining has be- 
come the common condition in the railway world. Railway 
strikes and lockouts have now become most infrequent, and in- 
dustrial unrest due to these causes in this sphere of activity has 
become greatly minimized. 

If these evils are eliminated by organized labor from its 
program, much will have been done to stimulate collective bar- 
gaining and to minimize the existing causes of industrial unrest. 
The remedies for all these evils do not lie with the employer; 
they rest wholly and solely with unionists. The responsibility 
for the growth of these evils, in our opinion, rests primarily 
with unionists who neglect their union duties, and who are as 
unmindful of their duties as union men as are many voters of 
their civic duty who remain at home on election da}'. 

We have faith in the honesty of purpose, in the fairness of 
spirit, and in the law-abiding character of the American worker, 
and w T e do not believe that the rank and file of American wage 
earners are in favor of many of the practices of some unions 
which have subjected unionism to so much severe, but just. 
criticism. We believe it is the duty of each unionist regularly 
to attend the meetings of his union, in order that democracy 
shall prevail in trade unions instead of an autocracy or despo- 
tism, which inevitably follows where the best membership fails 
to attend union meetings, and thus permits the affairs of the or- 
ganization to get into the hands of incompetent, ill-judging, or 



202 SELECTED ARTICLES 

dishonest officials, who, for their selfish ends, abuse the power 
and authority vested in them. 

Wherever there are found honest, high-minded, clear headed, 
labor leaders — and in the course of our investigations and hear- 
ings we have come into close personal touch with many such as 
these, who have commanded our esteem and respect — it will be 
found that, as a rule, they represent unions where the better 
membership takes a lively and active interest in the welfare of 
the association, and regards it as a sacred duty to regularly 
attend its meetings. 

We say frankly that if we were wage earners we would be 
unionists, and as unionists we should feel the keen responsibil- 
ity of giving the same attention to our trade union duties as to 
our civic duties. 

The ideal day in the industrial world will be reached when 
all labor disputes will be settled as a result of reason, and not 
as a result of force. This ideal day can be hastened if the em- 
ployers, on the one hand, will earnestly strive to place them- 
selves in the position of the worker, and look at the conditions 
not only through the eye of the employer but through the eye of 
the worker ; and if the worker will strive to place himself in the 
position of the employer, and look at the conditions not only 
through the e}^e of the worker but through the eye of the em- 
ployer. 

This, of course, means the strongest kind of organization on 
both sides. It means that employers must drive out of the 
ranks of their associations the law breaker, the labor contract 
breaker, and the exploiter of labor. It also means that, in the 
interests of fairness, every Board of Directors of an industrial 
enterprise should have within its organization a committee for 
the special purpose of keeping the Board of Directors advised 
as to the condition of their workers. And it finally means that 
trade unions must, in order to minimize the causes of industrial 
unrest, among other things remove the weak spots in unionism 
set forth herein, thereby hastening the day when employers will 
no longer fear to recognize and deal with unions, and when col- 
lective bargaining shall thus become the common condition. 

Finally, we feel that employers, individually and through 
their associations, in common with thoughtful representatives of 
labor, should give their fullest share of thought and lend their 
heartiest cooperation in aiding to solve, through constructive 
legislation and other ways, the great problems of vocational ed- 



PROBLEMS OF LABOR 203 

ucation, continuation schools, woman and child labor apprentice- 
ship, hours of labor, housing, sickness insurance, workmen's 
compensation, safety measures, old age pensions, and unemploy- 
ment. The hope is therefore expressed that employers will 
strive to work with rather than against intelligent labor repre- 
sentatives in aiding, through these various movements, to lessen 
industrial unrest and to still further improve the condition of 
wage earners and their dependents. 



CAPITALISM AND SOCIAL DISCONTENT 1 

In these days when capital is being destroyed on an enor- 
mous scale in the European War, some fundamental ideas are 
gaining recognition by the mere logic of events which in the 
piping times of peace would have taken great pedagogical effort 
and much time to enforce. Unconsciously, the upheaval of in- 
dustry m the belligerent countries is tied up in every one's mind 
with speculations as to the diminution in the supply of capital 
now and in the immediate future after the end of the war. 

The fundamental problems for the laboring men, however, 
will not only remain, but their pressing importance will be in- 
tensified by all that is happening in the war. 

In some way the belief has won a wide support that the 
empty-handed young workman is, and must remain, outside 
the sacred precincts of industrial success because he is denied 
the hope and possession of capital. Or, as it was expressed by 
an intelligent student: "What hope is there, under the present 
industrial system, for the disfranchised classes?" No doubt, 
the supposition that the laboring force is practically cut off from 
the possession and advantage of capital is the basis for the fun- 
damental tenet of Socialism that the State should control all 
capitalistic instruments of production in the common interest 

The evolution of capitalistic forms has gone on since early 
times almost in geometrical progression until we have reached 
the amazing variety and efficiency of those of the present day. 
In a time of only rude forms of primitive capital the surplus 
left for savings was but small; and, in addition, the prevailing 
violence of the times gave little security to what was saved. But 
capital grew more rapidly as capitalistic forms increased. It is 

1 By J. Laurence Laughlin. North American Review. 213:403-12. 
March, 1916. 



2o 4 SELECTED ARTICLES 

sometimes asserted that those of small incomes have no margin 
from which capital can be saved. The mere fact of the steady 
and marvelous growth of capital as the race has developed out 
of meagre, primitive resources is the final answer to any such 
claim. Capital has become an essential and powerful agent in 
production, separable from labor, exchangeable among men by 
loans, practically unlimited in supply, except as it may be limited 
by the saving propensities of mankind and by the materials 
(e.g., wood and iron) out of which the concrete forms of cap- 
ital may be made. Indeed, modern civilization, the everyday 
present well-being of the race, would be wholly impossible with- 
out the efficient aids which man has already created in the multi- 
farious forms of capital. 

Capital serves to discount long-continued processes of pro- 
duction. Since we can obtain more goods by the aid of capital 
than without, we move forward, by inventions touching special- 
ized processes, to adopt methods absolutely impossible without 
more or less durable forms of capital. Thus satisfactions which 
meet varied wants become more abundant and cheaper only as 
industry is able to use more and more capital, — that is, only as 
production becomes more capitalistic. The only limit to this 
development, as has been said, is the self-control and ingenuity 
of the human mind. Hence, not only does capital change the 
relation of man to his environment and to his ability to satisfy 
increasing wants, but it enables him to create a system of in- 
dustry involving an extensive quality of cooperation and division 
of labor (as against primitive individualism), which would be 
wholly impossible without it. This is the outcome of capitalism. 

We thus come to see capitalism as a highly beneficient in- 
fluence in the economic world. It has enlarged the comfort and 
range of consumption of the poorest toiler on the earth. That 
truth is unmistakable. Then why is it that in the labor liter- 
ature of our day "capitalism" is used as a term of reproach, 
or objurgation? What really resides in the hopeless lament 
that the laboring classes are, in respect of capital, "disfran- 
chised"? 

Capitalism probably has the connotation in the minds of those 
who thus express themselves that it is responsible for the separa- 
tion of mankind into employers and employees, into masters and 
servants. Why is it that in the world of industry some men are 
employers and some are employed? To some of those who 
have lately come from nations having privileged classes, where 



PROBLEMS OF LABOR 205 

many are born to wealth without effort of their own, it may 
seem that all capital is unjustly owned by its possessors. But 
apart from inheritance, gifts by privilege, and robbery, the 
enormous mass of modern industrial capital has come into 
existence by a personal process of saving, by abstention from 
personal consumption in order to get it for productive uses. 
The original of capital has both a psychic and a physical element. 
Given a strong desire to save, the amount of capital accumulated 
will vary with the margin from which savings can be made; or, 
given the margin, large or small, the amount saved will vary 
with the ability to realize the future. Anything, therefore, 
which will increase the power of the future over the present 
will, other things being equal, increase the amount of capital. 

The creation and legitimate possession of capital, conse- 
quently, requires certain personal qualities, — willingness and 
imagination enough to weigh a future gain over against a pres- 
ent indulgence, self-control, patience, persistence, foresight, and 
prudence. Those who have these homely virtues become the 
possessors of capital, and hence employers of others ; while 
those who have them not, and own no capital, must seek those 
who have capital ; and hence are employed by others. The sepa- 
ration into the two great classes of the employers and the em- 
ployed is thus due to differences in human qualities ; differences, 
however, of a kind which can be removed by training, environ- 
ment, and the development of character and civilization. More- 
over, is it not a beneficient order of things by which material 
success — which appeals strongly to many who are deaf to ordi- 
nary moral and religious appeals — is set forth as a reward for 
the exercise of many of the simplest virtues? Indeed, one of 
the fundamental weaknesses of Socialism is that it promises 
to its votaries the possession of capital through the action of 
the State, without any personal sacrifice on their part and by 
removing the very stimulus to character and virtue laid upon 
them by the existing system of society — more or less faulty 
though that system may be in other ways. 

We are logically forced to the conclusion, therefore, that 
there is no limit to the supply of this immensely powerful 
and necessary factor, capital, except the total increase of 
wealth over maintenance, and the willingness to save. There 
is, then, no possible monopoly in capital. By the spread of 
intelligence and science the total wealth from which savings 
can be made is increasing, precisely because new forms of 



206 SELECTED ARTICLES 

capital are being constantly devised which are over enlarg- 
ing the productive forces of mankind. To this process there 
is no end. There is, also, no monopoly of the powers of men 
to labor or to postpone consumption. It is a matter to be de- 
cided only by the individual himself. He is not restrained or 
"disfranchised" by any power outside himself. If a young man 
with limited skill and intelligence ignorantly marries without 
having saved anything and immediately begets a large family 
of children, of course he finds it hard to save on a very small 
income; and hence he may regard the man who has already ac- 
cumulated capital as a monopolist to whom he must go for 
employment. The situation, however, is one of the laborer's 
own creating; the fault is not in the existing system of society, 
nor in any limitation to capital, which can be saved by any 
one who is willing to comply with the rules of the game set 
by the character of human nature and our external environ- 
ment. In short, the improvement of the position of the poorer 
laborer is largely dependent on internal ethical growth and 
self-control. The remedy is, in the main, not social, but per- 
sonal. 

Such being the essential reasons why some men are emplo3~ers 
and others are employed, why some men have capital and 
others not, the very natural ambition of those who have meagre 
incomes to enlarge them has created what we have come to 
describe as "social discontent." It would be very unfortunate 
if those having little did not w T ish to have more of this world's 
goods, in order that they might be freed from the deadening 
effects of monotonous labor without the hope of a decent and 
cheerful environment. Therefore, "social discontent" is not a 
thing to be decried; but a thing which, if it did not exist, we 
should wish to create and stimulate as a means of establishing 
the very motive for progress in those who sometimes have no 
ambition and think they are "disfranchised" (in the industrial 
sense). Thus given the motive, how may we state the means 
to the given end? We are all agreed in wishing for larger 
incomes for those in the harder walks of the unskilled; but 
the really difficult thing is to come to an agreement upon the 
means of reaching the end desired by us all. 

Perhaps the one instrumentality for increasing the shares 
of workingmen which has become sacrosanct in the labor world- 
is the union. Is this a means likely to accomplish the desired 
end? Let us examine this means dispassionately, and solely 



PROBLEMS OF LABOR 207 

with the aim of testing its probable efficacy for raising the stand- 
ard of living, and for increasing the consumption, comfort, 
and enjoyment of the lower range of laborers. 

The laborers are urged lo regard "trade-unions as the means 
through which to work out their economic salvation." 1 Not 
only are unions to provide "just wages," but to bring about an 
equitable distribution of wealth: 

Trade-unionism stands for the constructive development of society, it 
seeks the more equitable distribution of wealth in order that all our 
people may develop to the extent of their highest and best possibilities. - 

To such an extent has this type of mind gone in insisting 
on the union as the one agent at hand for bringing about a 
rise of wages and the progress upwards of the laboring classes 
that its vision is obscured for any other means — and this mainly 
on the ground that the union is the only practical means by 
which to reform an inequitable system of distribution. Tre- 
mendous energy has been put into the cause of Unionism in 
this behalf. That unions have an important place in our eco- 
nomic life no one doubts; but to suppose that the union is the 
solution of the problem of equitable distribution no one, in his 
economic senses, believes. 

Elsewhere I have tried to emphasize the point — not new by 
any means — that unions are characterized by the basic principle 
of monopoly of labor. Their whole economic purpose is to 
try to raise wages at a given time and place by limiting the 
supply of labor obtainable by employers. To this it has been 
replied that "a labor-union is not a combination or conspiracy 
in restraint of trade"; that no decision of the courts has de- 
clared that, under the anti-trust act, an organization of work- 
men "is an unlawful monopoly." Of course not; nor is any law- 
ful organization. The real point at issue is : Does this or that 
particular combination of laborers commit acts in restraint of 
trade? If it does, it comes under the penalties of the act, as 
in the case of the Danbury Hatters. 

Moreover, in reply to the truism that unions are based on 
the principle of monopoly, a somewhat irrelevant reply 3 is given 
that a distinction should be made between organizations formed 
to control the prices of commodities such as the necessities of 
life (referring, of course, to the so-called trusts), and those 

1 John Mitchell: "The Economic Necessity of Trade-Unionism." 
Atlantic Monthly, February, 19 14. 
3 Ibid. p. 169. 
8 John Mitchell, supra, p. 164. 



208 SELECTED ARTICLES 

"formed for the purpose of defending and promoting the in- 
terests of the wage-earners'' (meaning, of course, labor- 
unions). This is obviously an appeal to the feeling of humanity 
which should not regard human beings as if they were inani- 
mate goods. Of course labor stands in a different category from 
goods, and the conditions affecting their supply are entirely dif- 
ferent : on that we are all agreed. But that distinction is irrele- 
vant to the point at issue. There are organizations of men 
known as producers "for the purpose of defending and promot- 
ing their interests," and there are organizations of men, known 
as laborers "for the purpose of defending and promoting their 
interests." Both are organizations of men; and both are sub- 
ject to the same law regulating the actions of men, if either 
should attempt to restrain trade. It is sophistical to speak as 
if one group were affected by law and the other not. 

This sophistical reasoning goes farther. It is claimed that 
the Anti-trust Act was never intended to apply to organizations 
having no capital stock, not dealing in products of labor, and 
not organized for a profit. It can make no more difference 
whether an organization violating the law has capital stock or 
not than whether a violator of the peace has blue eyes or 
brown eyes. It can make no difference what a combination 
ostensibly deals in, or whether its profits are large or small; the 
real issue must always be, has it violated the law of the land? 
Why then should any one be pained to find unions included 
under the provisions of the Anti-trust Act? They could not be 
included merely as organizations, no matter what their pur- 
pose, if they did nothing objectionable under the law. If the 
members of a union are proved to have restrained trade there 
is no reason why they should not be regarded as violators of 
*he law as well as any other persons or organizations. 

Since the formative principle of a union is a restriction 
of employment to its own members, the attitude of labor 
leaders to it is highly important. It bears on the large 
question of the proper means by which the workingmen may 
better their position. This attitude is briefly summed up as 
follows i 1 

If it eventually should be held that labor unions as such are monopolies 
in restraint of trade and thus subject to dissolution by order of the court, 
no greater disaster to the orderly, rational and constructive development 
and progress of the wage-earning masses will have occurred. 

1 John Mitchell, supra, p. 163. 



PROBLEMS OF LABOR 209 

Obviously no union whose acts are lawful is in danger of 
dissolution. "Trade-unions," it is claimed, "strive for peace 
based upon industrial righteousness." 2 The inference is that 
whatever, in the eyes of the Unionists, is "industrial righteous- 
ness," whether forbidden by law or not, should be allowed to 
unions without danger of dissolution. Who is to decide what 
it is? The union is to remain peaceful, provided there is 
allowed to it what it itself interprets to be "industrial righteous- 
ness." 

Quite apart from the abuses of union organization (which 
are separable from the legitimate services of unions), the eco- 
nomic function of the union is what most concerns us. Taking 
it at its best, can it produce the results claimed for it? 

As has been said, the essential principle of it is the monopoly 
of labor. It can accomplish its aim of raising the wages of its 
members only by the limitation of competitors. If the whole 
supply of labor were under control, then the union could pro- 
duce a complete monopoly and fix price; but since this is hu- 
manly speaking, impracticable, there can be attempts at fixing 
price only by artificial monopoly. The reason of this failure 
to function as a perfect monopoly is obvious. The supply of 
labor through births cannot be controlled by unions, as now 
conducted. If the supply of workers is certain to come forward 
for physiological reasons quite irrespective of union policy, it 
is useless to assume any power by unions to fix prices of labor 
through control of supply. And yet that is the central theory 
of Unionism. 

Are unions indeed the only means at hand to accomplish 
"the orderly, rational and constructive development and prog- 
ress of the wage-earning masses"? The statement made in 
John Stuart Mill's day still remains true, that the extraordinary 
progress made in industrial output and efficiency of production 
for many decades has not been accompanied by a corresponding 
enlargement in the income and consumption of the wage-receiving 
classes ; because numbers have increased as production has ad- 
vanced, and a larger total dividend has been spread over more 
divisors, giving to each laborer a not much larger quotient than 
before. If this be true, the future progress of the laboring 
population depends upon something more than fractional ad- 
vances in their wages. Is it not beginning to dawn upon the 

2 Ibid, p. 162. 



210 SELECTED ARTICLES 

real friends of labor that betterment cannot be permanently or 
even sensibly advanced so long as men are merely receivers of 
wages? The union, however, assumes that all depends upon the 
matter of wages. And yet, looking back, can any sympathetic 
friend of labor be satisfied with the gains which the workers 
of our race have won through the mere receipt of wages? 

The central reason why the union is not a means competent 
to solve the problem of an inequitable system of distribution is 
that it confines its attempts to control the price of labor to a 
means of controlling supply which is really illusory. Moreover, 
the price of anything is also affected by whatever touches the 
demand for it. The thing to be acquired must have such quali- 
ties as will excite in the demander a belief that it will satisfy 
his need. Granting the need, and the ability to pay, the price 
will be affected by the utility of the thing to be marketed. 
Other things being equal, the greater the efficiency or utility of 
labor the greater the demand for it. This is one reason why 
skilled labor may command higher wages than unskilled. Does 
the union aim to develop efficiency and utility in labor, in order 
to obtain higher wages? Not usually. 

Another economic difficulty has been blinked by those who 
rest their hopes alone on wages, and try to connect the wages 
to be paid with the value of the product turned out. Even 
some respectable authorities fail to see that two separate pro- 
cesses of valuation are going on, each independent of the other, 
both in time and in conditions of demand and supply. The bar- 
gaining for wages to workmen goes on at a time before the 
goods of which they are working have been produced ; and la- 
bor leaders are right who insist that the supply of labor and 
the demand for it are affected by all that characterizes human 
beings on the one hand as distinct from those that characterize 
inorganic matter on the other. The supply of labor comes for- 
ward as a result of the strongest instinct in human beings; and 
the demand for labor can come only from those who can pay 
for it (i. c.j with funds saved). On the other hand, the finished 
product is priced at a time after the bargaining for labor has 
been settled; and the supply of goods comes forward in an- 
swer to an offer of purchasing power, and under conditions in- 
fluenced by efficiency of production, the* condition of the arts, 
inventions, divisions of labor and the like. The price-making 
process, therefore, is clearly distinct in time and conditions for 
labor on the one hand, and goods on the other. The obvious 



PROBLEMS OF LABOR 211 

conclusion from this admitted fact, then, is that methods of rais- 
ing wages must be of a kind to affect the pricing of labor, and 
are more or less remote from those affecting the pricing of 
goods. 

The upshot of the whole matter is clear in logic and in 
experience. Permanently to raise wages of any group of 
laborers, we must raise their productive power, or their utility, 
to the demander. To do that is to place them, by natural mon- 
opoly, in the class of the skilled, where their numbers are more 
or less limited relatively to the unskilled. In other words, sup- 
ply is directly affected to the permanent advantage of those in- 
cluded. Thus the artificial monopoly of the union (which mis- 
takenly aims at restriction of supply without an advance in 
quality) is avoided. 

More than this, the mere receivers of wages, in bargaining 
for a definite wage before work is undertaken, thereby contract 
themselves out of risk. If the pricing of goods goes wrong 
and a loss to the employer results, the claim of the receiver of 
wages is unimpaired. But as the wage-getter is thus freed from 
all risk he is also cut off from all exceptional gains. The factor 
assuming industrial risk is the one that obtains all exceptional, 
or differential, gains or losses due to unexpected changes affect- 
ing the price of goods. In a young country like the United 
States a well-established business gains in volume by the mere 
growth of population and industry. Moreover, the resources 
and opportunities of such a country are but partly known, and 
are constantly opening to the enterprising man who can control 
capital. These new enterprises, since accompanied by more or 
less risk, if successful, bring in exceptional gains. In addition, 
the land of the new country rises in value as it is more densely 
settled; in fact, most farmers of the last generation have gained 
less by raising crops than by the rise in the price of land. 

Consequently we are obliged not only by experience but by 
economic analysis to face the fact that the improvement of the 
wage-earning masses can be gained only by a policy quite dif- 
ferent from the one accepted in the past, and which forms the 
essence of Unionism. To rise to a higher level the laborer 
must get some of the advantages possessed by the employer and 
the risk-taker, and thus obtain some of the inevitable differential 
gains characteristic of a new and growing country. In short, 
the true remedy for a healthy "social discontent" is more capital- 



212 SELECTED ARTICLES 

ism. Heterodox as this advice may seem, the more it is pon- 
dered the more practical, effective and successful it will prove. 
The differences marking off the possessors of capital from 
those who have none are due, as already pointed out, to dif- 
ferences in training and in human qualities. There is no mon- 
opoly in existence to prevent any person from acquiring the 
power to weigh a future gain over against a present indulgence, 
to get self-control, patience, foresight, prudence, thrift, and 
good judgment. No one has been thus "disfranchised." If a 
person has these qualities, he inevitably becomes a possessor of 
savings, and is thus a capitalist. The qualities which come with 
the saving of capital will also work to restrict imprudent mar- 
riages and the birth of more children than can be properly fed 
and educated. In short, by directing attention to the develop- 
ment in the laborers of certain essential qualities, and calling 
upon all the educative forces of philanthropy and organized so- 
ciety to aid in that purpose, we shall answer "social discontent" 
by some permanent gains to industrial efficiency and wages, 
and bring to the support of the wage-earning masses the wide- 
reaching influences of capitalism. 



COLLECTIVE BARGAINING 1 

Organization of labor has become a recognized institution in 
all the civilized countries of the world. It has come to stay ; it 
is full of usefulness and is necessary to the laborer. It shows 
serious defects at times and in some unions. These are an ap- 
parent willingness to accept benefits enforced through a fear of 
lawlessness, a disposition to use duress to compel laborers to 
join unions, and efforts to limit output and to create a dead 
level of wages, and thus wipe out the necessary and useful 
difference in compensation of those who are industrious and 
skillful and those who are lazy and do not strive to increase 
the product of the employer whom they serve. 

These are evils that as the unions grow in wise and intelligent 
leadership we may well hope are being well minimized. 

Much can be done by employers in anticipating just demands 
of employees. Workers have had too many instances of holding 

1 By William Howard Taft. 



PROBLEMS OF LABOR 213 

back of employers until they are forced to justice. Too many 
employers seek to justify failure to raise wages by pointing to 
their welfare work for their employees. This is of a paternal 
character and impresses the workers with the idea that they are 
being looked after as wards and not treated as men capable of 
exercising independent discretions to their welfare. They are 
apt to give the employers the idea that it is a generous conces- 
sion they are making out of the .goodness of their hearts and 
that they are not merely yielding a right for a quod pro quo 
for what they receive. 

The most difficult persons to deal with are the extremists on 
both sides. On the side of labor there seems to be much sus- 
picion by one leader or another, that few are willing to make a 
just concession, not because they don't recognize its justice, but 
because if they admit it they are charged with betraying the 
cause of labor. Thus they furnish to their rivals in leadership 
among workingmen the opportunity to undermine their standing 
with their fellows. This often puts the labor side in an inde- 
fensible position and offers to its enemies a basis for criticism 
that might easily be avoided. 

On the other hand, there is among employers the bourbon, 
the man who never learns anything and never forgets anything; 
the man who says : "It is my legal right to manage my business 
as I choose, to pay such wages as I choose, to agree to such 
terms of employment as I choose, to exclude from my employ- 
ment union men, because I don't approve of the tenets of the 
union, and to maintain a family arrangement of my own. I do 
fairly by my men; I pay them what I think is right, and they 
will not complain unless some outside union agent interferes. I 
run a closed non-union shop, and I am happy and propose to 
continue happy." 

This man is far behind in the progress of our social civiliza- 
tion. He lacks breadth of vision extending beyond the confines 
of his shop. He looks to fear of courts and injunctions and 
police and militia as the ordinary and usual instruments for con- 
tinuing his business peacefully and maintaining his rights. He 
is like the man who regards the threat of a divorce court as a 
proper and usual means of continuing domestic happiness. He 
does not recognize that we have advanced beyond the state in 
which employers and employees are mere laws unto themselves. 

He does not see that the whole public is interested in indus- 



214 SELECTED ARTICLES 

trial peace. He does not see that the employers have certain 
duties social in their nature that are not defined and are not 
enforcible in law, but exist just as family duties of care and 
affection exist. He has not followed the growth of things. 

As long as the system that he insists upon continued, in- 
dividual laborers were at the mercy of their employers. What- 
ever they got was a concession. They could not maintain them- 
selves in a contest with their employer, dependent as they were 
on their daily wage, and independent as he was with accumulated 
capital. That very unjust situation led to the organization of 
labor that the employee by massing contributions may maintain 
himself during an industrial struggle without wages. 

This has come to collective bargaining, which is bargaining 
by the group system. A group of laborers knowing their rights 
and knowing how to maintain them, put themselves on a level 
with the employers, and the result reached is far nearer a just 
one than any before attained. That it may often be unjust, goes 
without saying, but so are all human attempts to reach the right 
line. Of course those individual laborers who do not see the 
advantage to them of the group system have a right to stay out 
and must be protected in doing so. But whether we will or not, 
the group system is here to stay, and every statesman and every 
man interested in public affairs must recognize that it has to be 
dealt with as a condition, to be favored in such a way as to 
minimize its abuses and to increase its utility. 

The workingmen of the country since the war began and the 
importance of their group action has been emphasized by the 
requirements of the war, have been given a sense of power in 
their united action which we must recognize and deal with. Of 
course, they may abuse this power ; and if so, they may find that 
they are not the entire community; but if under level-headed 
leadership they do not push it to an excess they will be able to 
do much for their members and indeed for the community at 
large. 

The junkers and the hunkers on both sides must stand aside 
and will be set aside if common sense prevails. The danger 
from bolshevism is far greater than from reaction to the bour- 
bon type of employment. The intelligent and conservative lead- 
ers of the labor movement should be encouraged. Their diffi- 
culties in dealing with their extreme constituents should be 
recognized. 



PROBLEMS OF LABOR 215 

ETHICS OF COLLECTIVE BARGAINING 1 
A British View 

Wage-Earners in Britain who have brought thought to bear 
upon the conditions of their employment have long been con- 
vinced that organization of the workers and collective contracts 
for the sale of labor were essential securities for a living wage 
and other elements of economic welfare. It was no social theory 
which brought this demand for collective bargaining to the fore- 
front of labor policy, but the plain teaching of experience which 
led the individual worker to perceive the disadvantages of a 
forced sale of his productive energy to a wealthy buyer who 
was under less pressure to buy than he to sell, and who usually 
could drive down the price by reason of an over-supply in the 
labor market. 

Under the pressure of this teaching, labor in many of our 
leading industries, mines, railways, docks, engineering shops, 
textile factories, printing works, etc., became so well-organized 
that bargaining between the unions and the organizations of 
the employers became the normal and accepted method of labor- 
contract. In many of these industries, there would remain a 
minority of unorganized workers forming non-union shops, or 
surviving as a negligible factor in strongly unionized businesses. 
Similarly on the side of the employers, there were firms which 
persistently stood out of the Association, insisting on the right? 
and practice of special wage and other arrangements with their 
employees. This right of "free labor/' or as it is called in 
America, the "open shop," was maintained even in the well-or- 
ganized industries by an ever-dwindling minority of business. 
In less-organized trades, particularly where women and low- 
skilled men were largely employed, it had a stronger basis of 
survival. 

And yet it would, I think, be a just generalization to assert 
that by the year 1914 (the great dividing line in modern history) 
the idea of individual labor-contracts as an equitable and so- 
cially-defensible method of getting labor for industry had be- 
come obsolete. In the case of skilled and well-organized trades 
it had been voluntarily displaced by collective bargaining of 
groups of employers and employed devising regular and elab- 

1 By J. A. Hobson. The Standard. 6:73-6. November, 19 19. 



216 SELECTED ARTICLES 

orate agreements and point boards for adjustment of differences. 
In the case of more backward trades the notorious failure of 
individual contract to secure a living wage and other recent con- 
ditions of employment had already led to State interference 
under our Trade Boards Act, which in a number of "sweated 
industries" empowered joint boards, representing capital and 
labor with governmental assessors, to fix minimum wages. 
Unrest in the great staple industry of coal mining had already 
before the war led to the establishment under governmental 
auspices of district committees, representing operators and oper- 
atives in the mines, for regulation of wage and other conditions, 
while an integral part of the agricultural reform policy to which 
Mr. George had committed the Government, included the fixing 
of statutory minimum wages. 

Thus in all parts of our industrial system the belief in and 
the practice of individual wage-contracts were rapidly disappear- 
ing. The criticisms of economists and employers of the old 
individualist school were met by pointing out that the system 
of individual bargaining would no longer work. Humanitarian 
feeling and sound civic sense condemned it as oppressive, 
degrading, and socially dangerous in the weaker trades, while 
in the stronger the enforcement by organization of a common 
rule for wages, hours and other conditions appeared indispen- 
sable if industrial peace and reliability of service were to be 
secured. In great modern industry the talk about the natural 
right of the individual firm to make its separate bargain with 
the individual worker was generally regarded as futile, having 
regard to the fact that one man's labor could only function in 
close, constant co-operation with the labor of hundreds and 
thousands of other workers. This large, co-operative basis of 
production demands a common rule for pa}', hours and other 
conditions which is utterly unattainable by treating individual 
workers as separate free bargainers. This elemental truth of 
the modern economic system, apparent before the war, has been 
greatly enforced by the experience of war-industry in Britain. 

It may justly be said that in Britain a whole generation of 
industrial evolution has been packed into these five crowded 
years of war emergency. Neither capital nor labor emerges 
from the war as it entered. In both a new level of organization 
and combination has been reached. Before the war, trusts were 
still regarded as distinctively American, cartels as German 



PROBLEMS OF LABOR 217 

bodies. It was, of course, known that fairly effective combines 
were operating in Britain as elsewhere, but they were regarded 
as exceptional and in most instances our free import policy was 
considered a sufficient security against monopolistic oppression. 
But during the war the processes of association and combination 
have been immensely accelerated in most of our essential in- 
dustries. Not only were such services as railroads, coal mines, 
and shipping, engineering in its main branches, taken under state 
control, but the public regulation of the metal, textile, chemical, 
leather and other essential manufactures was such as to compel 
business which formerly had worked in independent competi- 
tion to form close associations for materials, costing and prices. 
After the war was over this enforced association could not dis- 
appear. Railroads and mines could not return to the era of free 
competition. The hold which government still retained over 
many supplies of raw materials and over prices obliged the 
manufacturers to look closely to their associations. Even when 
these war-shortages shall have passed away, there is no proba- 
bility of a return to pre-war competion. Cartels or other asso- 
ciations for buying and selling, trade arrangements for the regu- 
lation of output, distribution of markets, and the fixing of profit- 
able prices are in existence or in proposition everywhere among 
our great manufacturing industries. 

A similar stimulus has been given to the organization of 
labor. The numbers and strength of the great Trade Unions 
have grown. Some five millions of our wage-earners are now 
unionized, mostly in the essential industries. Not only in the 
advanced trades, such as cotton, ship-building, leather, printing, 
but in many of the relatively backward trades, such as agricul- 
ture and the clothing trades, individual bargaining has now be- 
come impossible. It has been displaced by the common rule, im- 
posed b}^ agreement of the representatives of employers and 
employed throughout the trade, and enforced in some instances 
by legal regulation. 

Although these methods of regulating wages and other con- 
ditions of employment by collective bargaining are far from 
perfection, they are recognized as a distinct advance upon the 
old method of individual wage-contract. Doubtless neither com- 
plete economic justice nor secure industrial peace is attainable 
by collective bargaining. For upon this plane there is reached 
no final determination of a "fair wage" or a "reasonable price." 



2iS SELECTED ARTICLES 

The relative economic force of the two parties still remains 
the chief determinant. But in Britain there is no disposition to 
go back to the individual bargain or the open shop. The minds 
of all our intelligent employers and labor leaders are- 
directed towards improving and perfecting the methods of col- 
lective bargaining, so as to bring into play adequate incentives 
towards that more secure and more productive functioning of 
industry which is essential to industrial peace and progress in 
the new order of society. 

The recommendations of the Whitley Committee in favor 
of establishing Industrial Councils and Workshop Committees, 
equally representative of capital and labor, for the regular dis- 
cussion and settlement of all matters affecting the conditions of 
employment and the general welfare of the trade, have been 
generally accepted by all classes, except the extremists on the 
"right" of the employers and the "left" of the workers. The 
idea is to introduce, alike into the national trade, the several 
industries and their constituent establishments, a genuine form 
of representative government, in which capital and labor should 
have an equal share. This is the first full recognition that 
labor is no longer to be treated as a mere commodity, but that 
it is entitled to a large participation in the control of the con- 
ditions under which it functions for the service of society. 

To Socialists and to a section of our new Guild Socialists, 
these joint committees, adopted by many of our trades and ac- 
cepted by several branches of our public services, appear to be 
unsatisfactory compromises, designed to buy off more revolu- 
tionary changes. And it is not difficult to show that, if the 
capital and labor engaged in certain fundamental industries 
were brought into close combination and were left in full con- 
trol of selling prices, they might establish a most dangerous 
oppression over the consuming public. For it is not yet suffi- 
ciently realized that the market, or consuming public, is an in- 
tegral part of every industry, and needs adequate representation 
in the control of that industry, so far as output, quality of ser- 
vices and prices are concerned. 

There are also other defects in the joint committee, regarded 
as a final method of industrial peace. But the real significance 
of the experiment consists in the fact that it rests upon the 
definite repudiation of the free individual labor contract. It 
formally presumes at each stage in its operation the existence 
of associations of employers on the one side, workers on the 



PROBLEMS OF LABOR 2x9 

other, and regards the decisions made by agreement of their 
representatives as the accepted rules for the working of the 
whole establishment or trade. The adoption of such represen- 
tative councils would be a practical, though not a legal, com- 
pulsion, both on employers and workers to' take up member- 
ship of their Association or Trade Union, in order to take part 
in forming and administering the common rules of the trade. 
This is the new level of conscious combination and repre- 
sentation which has been reached in Britain, and which is gen- 
erally accepted as the minimum concession to the demand of 
labor for an effective voice in determining the conditions of its 
employment. The old insistence of the capitalist-employer, that 
he would brook no interference with his absolute right to run 
his business as he thought fit, and buy his labor by separate 
agreement in a free labor market at any price for which he 
could obtain it, has virtually disappeared. It is recognized as 
impracticable and out of accord with the new conception of in- 
dustries as social services. For this lesson of the social mean- 
ing of an industry, our war-experience has surely taught. Dur- 
ing the war it was thought and felt by the nation that the busi- 
ness of employer and worker in the mines and shipyards was 
to turn out coal and ships, not to make dividends or wages, 
and that the farmer's business was to use his land so as to pro- 
duce the largest quantity of food. Underneath all the greedy 
profiteering, this general sense that an industry was a social 
service and that the life of the nation depended on its efficient 
operation obtained powerful recognition. Some of this genuinely 
humanist conception of industry has survived. The conception 
of trade as a competitive struggle between rival businesses, and 
of a business as a private profiteering instrument, which bought 
its labor as it bought its raw materials or its fuel, is no longer 
possible. Businesses *are not going to continue the waste of a 
cutthroat competition. They are going to combine. Labor is 
no longer going to sell itself in hourly or weekly units of the 
individual worker, but in long-period collective flows under 
regulations of price and hours and hygiene which shall check 
the inhuman encroachments of the machine, and win for the 
people in their capacity of producers, consumers and citizens 
the fruits of human industry. The fact that war-conditions 
have left a heavy legacy of suspicion and class-hate and have 
by a natural suggestion turned the belief in force as a remedy 
from the international into the intestinal struggle, must not 



220 SELECTED ARTICLES 

blind us to the importance of the new experiments in the co- 
operation of industrial factors or lead us to a premature dis- 
missal of these experiments in industrial democracy. 



COLLECTIVE BARGAINING IN THE GLASS 
BOTTLE INDUSTRY 1 

The agreement between the Glass Bottle Blowers' Associa- 
tion and the National Glass Vial and Bottle Manufacturers' 
Association furnishes an impressive and an instructive exhibit 
of the feasibility of carrying on for a long term of years a 
peaceful and mutually agreeable system of collective bargain- 
ing. While friction between the parties to the agreement has 
at times been great and while the agreement has often been 
almost at the breaking point, yet so enlightened has been the 
policy of the representatives of both the union and the manu- 
facturers' association in granting concessions and in yielding 
upon disputed points, that the agreement has operated, in one 
form or another, for almost a quarter of a century. Nor have 
external conditions been particularly favorable to the continued 
life of the agreement. The technical revolution of the industry, 
beginning in the middle nineties with the installation of the so- 
called ''semi-automatic" machine and intensified after 1900 by 
the invention and the later extensive use of the Owens auto- 
matic machine for the manufacture of glass bottles, has pre- 
sented to the conferences of the manufactures and their em- 
ployees problems that every year become more perplexing and 
more difficult of solution. The promulgation of working rules 
to govern those members of the union who were employed on 
the semi-automatic machines, the regulation of the wage scale 
so as to retain a fair wage for the glass blower and at the 
same time to permit the employer of hand blowers to compete 
against the machine, and finally a new adjustment of wage 
scales designed to meet the competition of the automatic, are 
a few of the problems which have received at the hands of the 
annual conference, if not a perfect solution, at least a workable 
settlement. 

1 By Leo Wolman. American Economic Review. 6:550-67. Septem- 
ber. 19 16. The material presented in this paper was collected by the 
writer while an agent of the United States Commission on Industrial Rela- 
tions. 



PROBLEMS OF LABOR 221 

History and General Description of the Agreement 

The glass bottle blowers were organized originally not in 
one national organization but in the separate and independent 
Eastern and Western Leagues of Green Glass Bottle Blowers. 
In 1886 the Western League became affiliated with the Knights 
of Labor as District Assembly 143 of that organization and in 
the same year the Eastern League was affiliated as District 
Assembly 149. As early as 1886, also, there is record of annual 
conferences between the Eastern and Western Leagues of 
blowers and of loosely organized associations of Eastern and 
Western bottle manufacturers. The fact, however, that the or- 
ganizations in these two sections of the country often worked at 
cross purposes and that concessions from the one would at times 
be used to force similar concessions from the other, coupled 
with the fact that the frequent passage of journeymen blowers 
from district to district made the disciplining of their member- 
ship difficult, soon led to a movement to amalgamate the West- 
ern and Eastern Leagues of Glass Bottle Blowers into one na- 
tional organization. 

In 1890, accordingly, the Eastern and Western Leagues 
united in one body under the title of the National Trade As- 
sembly 143, Knights of Labor of America. And in July, 1891, 
the assembly withdrew from the Knights of Labor to become 
the Green Glass Bottle Blowers' Association of the United 
States and Canada. With the formation, then, of the national 
organization of glass bottle blowers in 1890, the sectional con- 
ferences of preceding years were succeeded by national confer- 
ences between representatives of the union and of the manu- 
facturers. 

During the first few years following the amalgamation, evi- 
dence of the conflicting interests of the Western and Eastern 
manufacturers could still be found. Thus, at the conference of 
1890, although an agreement could have been effected with the 
Western manufacturers, the chairman of the conference stated 
that he could not promise that the Eastern manufacturers would 
be bound by the findings of the conference. Later, the Eastern 
manufacturers actually withdrew from the conference. Indeed, 
it was at that time the opinion of the officers of the union that 
the "Eastern and Western manufacturers were evidently trying 
to effect a settlement independently of each other to create dis- 
content" in the ranks of the union. But since the union would 



222 SELECTED ARTICLES 

treat only with a joint committee representing the manufac- 
turers from both sections of the country, the manufacturers 
were unsuccessful in their efforts to revert to the earlier sectional 
conferences. With the gradual development of the machinery of 
the conferences and with the growth in mutual confidence of 
the parties to the conferences, the" conflicting interests of the 
different sections became less pressing and the manufacturers' 
association developed into a more compact and more homo- 
geneous organization. 

Prior to 1899 it had been customary to hold annually one 
wage conference either in the month of July or August, usually 
several weeks after the union and the manufacturers' associa- 
tion had held their annual conventions. But this system was 
soon found to be open to serious objections. A single annual 
conference at which were submitted by the conferees demands 
and counterdemands whose purport was known only to their 
sponsors precluded, in the judgment of both the manufacturers 
and their employees, that familiarity with the propositions which 
is essential to their intelligent consideration. The plan was 
therefore adopted of holding a preliminary conference in May 
at which would be submitted the demands of both parties. 
Those questions upon which there was little disagreement would 
be settled at this preliminary conference. The more debatable 
propositions would next revert to the annual conventions of both 
associations for further discussion and would then in July or 
August be submitted to the final conference for final disposition. 

The value of such a preliminary conference was at once ob- 
served. President Hayes of the Glass Bottle Blowers' Associa- 
tion writes in 1900: 

The amount of work done at the May conference this year in the way 
of listing bottles and discussing important questions proves that this pre- 
liminary meeting of the wage committees has become a vital necessity, 
unless, indeed, we are desirous of a protracted wage conference later on. 
or possibly two or three separate ones, which may be prolonged to such 
an extent as to delay or hamper the beginning of work in the fall. At the 
May meeting we hear the manufacturers' side of the story, and are, there- 
fore enabled to lay it before the convention for discussion and counsel. 
This is right and proper, as it is a matter of duty for us to view all ques- 
tions from both sides, and it would be neither just nor safe for us to 
legislate with only a one-sided knowledge of matters upon which the trade 
depends so much for successful operation. 

With the establishment and successful operation of the pre- 
liminary conference, elaborate rules, regulating the conduct of 
the preliminary and final conferences, were formulated. Of the 
rules regulating both conferences, the most important were (1) 
the rule providing that no question which had not been brought 



PROBLEMS OF LABOR 223 

before the preliminary conference would be considered at the 
final conference and (2) the provision for the submission of 
questions by the parties to the conference. 1 

The agreements made before 1902 laid down the working 
rules and price lists for each year but made no provision for 
the adjustment of questions arising between the annual confer- 
ences. There was, to be sure, the rule stating that "all ware 
not specified in the list shall be rated at the same price and sub- 
ject to the same rules, in regard to weight, as those specified in 
the list which they resemble in size, shape, weight, and finish." 

This clause did not, however, specify who was to settle dis- 
putes arising from disagreements in assigning new bottles to 
various brackets, nor upon whom was to devolve the duty of in- 
terpreting the many rules included in the annual agreements. 
This link in the agreement was supplied at the conference in 
1902. At the suggestion of the manufacturers, the President of 
the Blowers' Association was chosen as the officer to whom "all 
information wanted in regard to the intent or meaning of rules 
and regulations shall be referred." It was further provided that 
his decision was binding until reported to and revised by the 
joint conference. 

As in the case of all matters included in the annual agree- 
ments between the bottle blowers' union and the bottle manu- 
facturers, the rules providing a mechanism for the adjustment 
of disputes arising between the final conference of one j'ear and 
the preliminary conference of the succeeding year have since 
1902 undergone some modification and considerable amplification 
and exist at present in the following form : 

All information wanted in regard to the intention or meaning of the 
rules, regulations and prices shall be referred to the President of the 
Blowers' Organization, whose decision in all such cases shall be binding 
unless said decision is reversed by the Joint Wage Preliminary Conference 
in .the case of a protest. 

Manufacturers who desire to protest against a decision of the President 
shall serve notice in writing on the Branch in their locality of their inten- 
tions to protest, and shall also notify the President of both the Manufac- 
turers' and Blowers' organizations of the protest; this notice shall contain 
all information necessary for a proper review of the case protested. Said 
notice shall be served not later than thirty days prior to the first day of 
the Preliminary Conference. 

1 The manner in which questions are submitted to the conference is 
described in the following clause of the agreement: "Manufacturers and 
branches shall notify each other of all bottles or changes intended to be 
submitted to the May conference, and the reason for so submitting them, 
which notice shall be in writing. The branches shall send such written 
notices to the President of the Glass Bottle ^ Blowers' Association and the 
manufacturers shall send their written notices to the President of the 
National Vial and Bottle Manufacturers' Association." (Wage Scale and 
Working Rules — Glass Bottle Blowers' Association. Blast, 19 14-19 15, sees. 
42-44.) 



224 SELECTED ARTICLES 

Protests on decisions made between April ist and July 31st shall be 
reviewed at the Final Conference with notice as above stated to be served 
no later than August ist. 

No case in protest shall be reviewed by either conference unless the 
foregoing has been fully compiled with. 1 

Originally, when a clear line of demarcation existed between 
the flint glass bottle workers and the green glass bottle makers, 
the union of green glass bottle makers, the parent organization 
of the present Glass Bottle Blowers' Association, held wage con- 
ferences with the association of green glass bottle manufactur- 
ers. Later, however, with the introduction of the tank and the 
extension of its jurisdiction over all bottle makers whether 
blowing bottles from tanks or covered pots, the union held sep- 
arate conferences with the green glass and with covered-pot 
manufacturers. At the conference of the representatives of the 
union with the representatives of the Flint Bottle Manufactur- 
ers' Association for the purpose of fixing prices and rules to 
govern the manufacture of covered-pot ware for the season of 
1902-1903, the chairman of the conference, a manufacturer, 
stated "that in his opinion all matters pertaining to the making 
of bottles should be settled by one committee, but that while the 
blowers were practically all in one association, the manufacturers 
were unfortunately divided into two, hence" the necessity for 
two conferences. In the following year, therefore, the scope of 
the manufacturers' organization was widened, to include all per- 
sons engaged in the manufacture of glass bottles ; and a sub- 
committee was thereafter annually appointed to consider ques- 
tions that might arise between the covered-pot manufacturers 
and their employees. Now that the manufacturers of covered- 
pot ware have been admitted into the employers' association, the 
Glass Bottle Blowers' Association holds annually a preliminary 
and a final conference with the representatives of one manu- 
facturers' association, the National Glass Vial and Bottle Manu- 
facturers' Association. At these conferences there are drawn 
four distinct sets of price scales and working rules, (a) One 
governs the manufacturers and employees engaged in the hand 
manufacture of glass from the tank; (b) another governs the 
manufacture of covered-pot ware; (c) a third relates to rates 
and rules for the semi-automatic machine in the manufacture of 
wide-mouth ware; and the last (d) constitutes the wage scale 
and working rules governing the "United and the O'Neill and 
the one and two man narrow-mouth machines." 

1 Wage Scale and Working Rules — Glass Bottle Blowers' Association, 
Blast 1914-1915, sec. 45. 



PROBLEMS OF LABOR 225 

The essential features, then, of the agreement between the 
Glass Bottle Blowers' Association and the National Bottle Manu- 
facturers' Association are : 

a. The provision for annual preliminary and final confer- 
ences for the discussion and settlement of working rules and 
wage rates. 

b. The machinery for the settlement of disputes arising be- 
tween the conferences and for the review of these settlements. 

c. The promulgation of price lists and working rules for the 
four divisions of the industry: the tank, covered-pot, semi-auto- 
matic wide-mouth, and semi-automatic narrow-mouth ware. 

The Employers' Association 

The National Glass Vial and Bottle Manufacturers' Associa- 
tion existed before 1890 as the Western and Eastern Associa- 
tions of Green Glass Bottle Manufacturers. These associations 
were loosely organized bodies that existed principally for the 
purpose of holding wage conferences with the Eastern and 
Western Leagues of Green Glass Bottle Blowers. With the 
amalgamation of those organizations in 1890 the manufacturers 
effected a somewhat similar combination which apparently con- 
fined itself to the selection of representatives to the annual 
national wage conferences with the United Green Glass Bottle 
Blowers' Association. Later, upon the absorption by the Glass 
Bottle Blowers' Union of all branches of the trade, the employ- 
ers' association similarly extended its jurisdiction. In the con- 
stitution revised and amended in 1902, it is stated that the asso- 
ciation admits into membership "any person who manufactures 
glass vials and bottles in tanks or open pots and employs work- 
men under the jurisdiction of the Glass Bottle Blowers' Associa- 
tion." An amendment to the constitution is now pending which 
would admit into membership "any person who manufactures 
glass bottles and jars, either from tanks or from open or cov- 
ered pots." 

The officers of the organization consist of president, vice- 
president, secretary, and treasurer elected annually by ballot and 
of an executive committee appointed annually by the president. 
This committee, together with the officers of the organization, 
constitute the representatives of the association at the annual 
conferences. Meetings of the association are held annually be- 
tween the preliminary and final joint wage conferences and are 
occupied almost exclusively with the discussion of issues raised 
in the preliminary conference. 



226 SELECTED ARTICLES 

The association practically restricts its activities to those of 
collective bargaining. The object of the association has been 

to increase the mutual acquaintance of all persons engaged in the manu- 
facture of vials and bottles; to exchange views on the various subjects 
that are of general interest; to look after any tariff legislation affecting 
the welfare of the business; to attend as far as possible to any changes 
or discriminations in the classifications made by railroads on the line of 
goods manufactured and handled by the association; to meet with the 
Blowers' Executive Board as often as may be necessary each year to fix a 
uniform scale of wages for blowing the various kinds of vials and bottles 
manufactured for the trade; to establish rules and regulations for the 
government of all factories throughout the United States and Canada; . . . 

Although provision is made for tariff and railroad committees, 
the organization has shown little activity in this direction. 

The relations of the association and the Glass Bottle Blow- 
ers' Union have on several occasions been almost at the breaking 
point and several of the conferences have adjourned without 
reaching an agreement. The organization, however, has never 
become a hostile association and no record is extant of its having 
sanctioned, as an association, even isolated acts of hostility 
toward the blowers' organization. In a few cases, to be sure, it 
has been unable to prevent members from violating the agree- 
ment ; persistent violation would, however, result in the expulsion 
of the member from the association. 

The association has never adopted any system of fines for 
the disciplining of its members either for the violation of edicts 
of the association or of the terms of the joint agreements. Nor 
did it have until recently any settled policy toward the union 
manufacturers not members of the association. For some time, 
such manufacturers were permitted to attend the conferences, to 
submit propositions, and to request reviews of the decisions of 
the president of the blowers' association. At the final conference 
in 1913, however, it was announced that the following resolutions 
had been adopted by the National Vial and Bottle Manufactur- 
ers' Association : 

Whereas, There are a number of Bottle and Jar manufacturers through- 
out the United States and Canada, employing members of the Glass Bottle 
Blowers' Association who have heretofore received practically all the 
benefits derived from the action of the Joint Wage Conference, without 
becoming members of the National Vial and Bottle Manufacturers' Asso- 
ciation, or without contributing towards paying the necessary expenses 
connected therewith. Some have declared they would get along better 
without the association or without a Joint Wage Conference. Others de- 
clare there is nothing to be gained by membership in the organization so 
long as they are able to obtain the benefits therefrom without sharing in 
the expenses, and by not being members they argue that they are not 
bound by the action of the Joint Wage Conference, yet they gladly accept 
and make use of all decisions of said conference that pleases them, there- 
fore be it 

Resolved: That the members of our Executive Committee when in 
conference with the workmen's committee, be and are hereby instructed 



PROBLEMS OF LABOR 227 

to decline hereafter to consider any disputes, grievances, etc., or the listing 
of bottles, their prices or classifications or any other matters arising in a 
factory the management of which is in no way affiliated with the National 
Vial and Bottle Manufacturers' Association that may come before the 
Joint Conference either directly or indirectly, thus leaving all such mat- 
ters to be decided by the President of the Glass Bottle Blowers' Associa- 
tion, whose decisions shall be final in so far as they pertain to the par- 
ticular factory, but any decision he shall make in such cases shall not be 
construed as establishing a precedent, nor shall it be applied to or be bind- 
ing upon other factories, but it is understood that any decision thus ren- 
dered, shall upon application by any member of this association, be sub- 
ject to review by the Joint Wage Conference. 

These resolutions for a time nonplussed the representatives 
of the union. "While this was a rather extraordinary proceed- 
ing," writes the secretary of the blowers' association concerning 
these resolutions, "still we could not but agree with them in 
their contentions. Our association will, therefore, exercise its 
best judgment in dealing with those who do not belong to the 
above-mentioned association, dealing as we have always done, 
fairly and impartially with all." The net effect of this action of 
the employers' association is to leave the independent union man- 
ufacturers in almost the same condition as before. They are 
granted by the union the same working conditions and the same 
prices as operate in the establishments of those manufacturers 
belonging to the organization. There is this difference, how- 
ever, the independent manufacturers have no organization to 
which they can appeal for a review of the decisions of the presi- 
dent of the blowers' union. 

The skilled branch of the glass bottle industry is about 90 per 
cent organized. During the nineties and the early part of the last 
decade strong non-union centers were to be found in New Jer- 
sey, western Pennsylvania, and Indiana. Vigorous organizing 
campaigns by the union resulted in the organization of many of 
the non-union plants ; until today a high degree of organization 
has been reached. To a considerable extent, however, non- 
unionism still flourishes in the gas belt of Indiana and in 
Western Pennsylvania. Of the union manufacturers, the ma- 
jority are members of the employers' association; and the resolu- 
tion adopted in 1913' resulted in the entrance of about thirty-five 
independent manufacturers. Those who still remain without the 
association feel that the benefits to be gained are not worth the 
expense of membership, inasmuch as they receive the same terms 
from the union as do those manufacturers belonging to the asso- 
ciation. It has also been said that a number of these independent 
manufacturers join the association when they have grievances to 
be considered and withdraw when their grievances are passed 
upon and adjusted. 



228 SELECTED ARTICLES 

The Making of the Agreement 

Unlike those national agreements which provide only -the 
machinery for the settlement of disputes and which leave to the 
local unions the formulation of working rules and, in some cases, 
wage rates, this agreement fixes in detail practically all of the 
conditions of employment of the glass bottle makers. The local 
unions can legislate only upon such matters as are concerned 
with the internal government of the union. When, however, 
some unforeseen question arises during the year, an attempt is 
first made to settle the matter in conference between the factory 
committee 1 and the employer, and if they are unable to arrive 
at an agreement, the question is referred to the president of the 
union. 

All questions relating to prices and rules, which are not set- 
tled to the satisfaction of both parties during the year, and those 
matters, already in the agreement, which one or the other parties 
wishes to have amended, are considered at the May preliminary 
conference. The questions not settled at this conference and 
those arising between the prelimina^ and final conferences re- 
ceive consideration at the latter conference. The matters upon 
which adjudication is desired are usually submitted to the con- 
ferences in the form of resolutions from local unions or of re- 
quests from individual manufacturers ; but all of such resolu- 
tions and requests must conform to the modus operandi de- 
scribed earlier in this paper. 

The members of the executive board of the Glass Bottle 
Blowers' Association act as the representatives of the union at 
the conference. These members are elected annually at the con- 
vention of their organization and hold office, therefore, only for 
one 3'ear. Although the acts of the representatives of the union 
thus frequently become the subject of review by their constitu- 
ents, the union conferees have throughout the conference debates 
shown unusual independence of judgment. That, however, their 
conduct has reflected the mature opinions -of the majority of 
the union is attested by the fact that many of the members of 
the executive board have been reelected over a number of years. 
Indeed, the president of the association, an ex-officio member 
of the board has now held that position for almost twenty 
years. 

The representatives of the union have full power to settle 

1 The factory committee is a committee of workmen in a shop chosen 
by the employees in that shop to represent them in conferences with the 
employer. 



PROBLEMS OF LABOIv 229 

questions without referring the matter back to their organization. 
Xor do they go to the conferences instructed to take one stand 
or another. Attempts have, to be sure, been made from time to 
time to instruct the representatives to follow out a certain line 
of action or to strip them of the authority to settle the more 
important questions arising at the conference. These attempts 
have, however, always been met by the concerted opposition of 
the officers and of the majority of .the membership. Thus, early 
in the history of the agreements resolutions were introduced at 
a convention removing the power from the conferees to settle 
anything relating to price lists, apprentice laws, or market money. 
These resolutions were received with the following comment 
from the president of the union : 

To adopt the amendment would simply deprive your officers of all 
executive power and make them mere figure-heads to represent the or- 
ganization. Take away the power to concede or alter anything in the price 
list, apprentice law or market money and you leave nothing of any im- 
portance on which to treat with the manufacturers'^ wage committee. No 
committee of manufacturers would meet your committee unless it had full 
power to act and bind the association and if this convention takes this 
power from them, it would be more sensible to put your demands on paper 
and send them by post saying that such is the will of the conventions than 
to send your representatives there merely to state it. This convention does 
not represent all the glass trade, only the working portion of it. Your 
employers represent the other portion. They also have an association and 
appoint a committee to present their demands in conference. If they 
adopt the same principle as is embodied in this resolution or amendment 
giving their committee no power to act on the main questions, do you for 
a moment think a settlement would ever be effected? No man with any 
self respect could accept office under such restrictions. 

Again in 1906 the attempt was made to instruct the repre- 
sentatives of the union on a definite proposition. Here, too, the 
attempt was unsuccessful. In this case, the resolution providing 
that the "30th annual convention instruct our President and 
Executive Board to entertain no proposition for reduction in 
wages the coming season" was replaced by the resolution "that 
it is the sense of the convention that we do not deem it advisable 
to accept a reduction for the coming season." 

The members of the executive board of the manufacturers' 
association are similarly the representatives of that organization 
at the annual wage conferences. Instead, however, of being 
elected annually by the convention they are appointed annually 
by the president of the organization. Like the union conferees, 
they are sent to the conferences uninstructed. But here, as in 
the case of the union, dissatisfaction with the work of their 
representatives has at times been expressed by manufacturers. 
These objections have arisen generally from two sources. In 
the first place, the manufacturers of hand-made ware have long- 
protested that their representation upon the wage committee has 



230 SELECTED ARTICLES 

been inadequate and that all legislation is framed to benefit the 
machine manufacturers at their expense. Accordingly, in 1912 
a number of the hand manufacturers withdrew from the annual 
conferences on the ground that those conferences were "domin- 
ated by the machine manufacturers and we do not care to have 
the machine manufacturers adjust the wages for the hand 
blown." The other protest arises from those manufacturers who 
feel that their executive committee has not presented the case of 
the manufacturers as vigorously as it might, nor has it been in- 
sistent enough in pressing their demands. From these feelings 
grew out the request that the president appoint, in addition to 
the usual committee, two alternates to be selected "from the 
twenty or more members who have protested present conditions" 
with the power to attend the wage conference. 

At the preliminary conference of 1914 a number of manu- 
facturers and members of the National Bottle Manufacturers' 
Association "asked permission to confer with the members of 
the committee representing the manufacturers and desired to be 
heard concerning matters in which the}' were interested." Their 
request was granted. When the meeting was called to order, it 
was announced 

that the meeting would be of an informal nature and each person present 
was permitted to talk upon any matters that were coming before the Joint 
Wage Committee. . . . Nearly all of the visiting members had more or 
less to say, and many things were explained in regard to the methods and 
manner of conducting the conferences. . . . The visiting members stated. 
later, that they had learned many things concerning the Joint Conference 
which they did not know, and before retiring expressed themselves as 
being much better satisfied than when they came. 

While these movements of protest have no doubt exerted 
some influence on the conduct of the conferees, neither in the 
case of the union nor in that of the manufacturers' association, 
have they effected any change in policy concerning the relation 
of the representatives to their respective organizations. All rep- 
resentatives attend the annual conferences as exponents of the 
sentiments of thir constituents ; rarely, however, do they attend 
bound by specific instructions. 

No formal system of voting is provided for in the agreement, 
but it is the prevailing practice in the conferences for the manu- 
facturers' representatives and for those of the union to vote as 
units. A mere majority of the members present, therefore, is 
not sufficient to carry a measure. The measure must be agree- 
able to a majority of the representatives of each party before it 
can become a part of the agreement. 

On several occasions the conferences have resulted in dead- 



PROBLEMS OF LABOR 231 

locks. Under such conditions it has been the custom for the 
conference to adjourn and for the majority of the establishments 
to resume operation under rules and prices of the preceding year 
in the hope that the following year would find the union or the 
manufacturers less obdurate. The climax of a series of de- 
mands by the manufacturers for substantial reductions in piece 
rates came in 1906 when the representatives of the employers 
persisted in demanding reductions which the union refused to 
grant. During the debate on the proposition, Mr Ralston, presi- 
dent of the manufacturers' association, suggested that "the mat- 
ter be submitted for arbitration to a judge of the courts." The 
suggestion was not acted upon. Indeed, the consensus of opinion 
in the trade seems to be opposed to the submission of major 
issues to arbitration. Both employers and employees prefer to 
thresh out the matters in conference and, when it is found to be 
impossible to reach an agreement, to work in a state of armed 
truce for one or more years under the rules of previous years. 
When it was stated above that in the event of a deadlock the 
manufacturers would. open their plants under the rules and prices 
in operation during the preceding year, it should have been noted 
that these resumptions of work frequently took place some time 
after the annual conference had adjourned. During this period 
between the adjournment of the conference and the acceptance 
by the manufacturers of the union's ultimatum, the agreement 
may be said to have been suspended. For example, at the con- 
ferences in 1905, the manufacturers demanded a general reduc- 
tion in piece rates of 33^ per cent. This reduction the union 
would not concede. The manufacturers, therefore, moved to 
adjourn without setting a date for a further conference. On 
September 1, 1905, the president of the Glass Bottle Blowers' 
Association issued a circular letter containing the following 
statement : 

Up to the present we have heard nothing from the manufacturers' 
association. Those among their members who insisted on a reduction and 
favored adjourning the conference until the same was secured will doubt- 
less remain idle as long as they possibly can. While others in that asso- 
ciation, coupled with the independent manufacturers, will begin starting 
their factories early this month. 1 

1 They could open their factories and employ members of the union 
under the previous season's list and rules; for on August 8, 1005, Presi- 
dent Hayes had issued the following circular letter to the trade: "Manu- 
facturers who desire can engage our members to work by agreeing to pay 
last season's wages, and if any of them are doubtful about our ability to 
hold out and want assurance that they will be given the benefit of any 
settlement that may hereafter be made different from that which we de- 
manded (last year's list and rules), branches are authorized to say to 
such employers that they will be given the advantage of any settlement 
that may be made later on and from the date upon which they started to 
work." 



232 SELECTED ARTICLES 

From this statement it is seen that for several months, at 
least, after the adjournment of the final conference, the industry 
was virtually in a state of lockout, or, more accurately, the 
agreement was temporarily suspended. The same situation arose 
in 1909. Again the manufacturers' demand for a substantial re- 
duction had been refused by the union. Accordingly the con- 
ference of July 26, 1909, disbanded; and the manufacturers did 
not open their plants. Early in September, however, the Amer- 
ican Bottle Company agreed to accept the concessions of the 
union. Moved by this break in its ranks, the manufacturers' 
association sought another conference at which an agreement 
was finally reached. 

In both instances, and in fact in all other similar cases during 
the life of the agreement, the strength of the union, in that it is 
virtually impossible to run non-union shops in the glass bottle 
industry, forced the employers to resume operation under condi- 
tions not entirely satisfactory to them. 

Technically, of course, this delay in opening a plant might be 
described as a lockout. It has, however, not been so regarded 
by the parties to the agreement. Even though conferences were 
adjourned without reaching any agreement and the manufactur- 
ers were forced, probably because of the superior strength of 
the blowers' organization, to employ the men at terms unsatis- 
factory to themselves, yet in the following year they showed 
confidence in the efficacy of a system of collective bargaining by 
again entering the conferences with their employees. 

The Settlement of Disputes Arising Under the Agreement 

In an agreement which specifies, in such detail as does the 
present one, practically all of the conditions of employment, the 
matters which arise during the year are as a rule purely inter- 
pretations of the agreement. For example, a new bottle is in- 
troduced in one of the factories and a dispute ensues as to the 
price to be paid for blowing the bottle ; since the agreement 
states that the bottle shall "be rated at the same price and subject 
to the same rules in regard to w r eight, as those specified in the 
bracket which they resemble in size, shape, weight and finish," 
but little room is left for any great differences of opinion. The 
same might be said of any question that might conceivably arise 
under the agreement. So inclusive are the annual agreements 
and so definite are their terms, that probably the majority of 
disputes arising in various localities are settled by merely turning 



PROBLEMS OF LABOR 233 

to a particular rule in the agreement and applying it to the case 
in point. On the other hand, disputes have been observed under 
the agreement where there was no question of the interpretation 
of rules, but where one or the other of the parties deliberately 
violated or disregarded the agreement. 

The first step in the adjustment of disputes under the agree- 
ment consists in referring the matter to a conference of the em- 
ployer and a factory committee.. Most disputes are settled in 
that conference. When, however, the conferees are unable to 
agree, the question is referred for settlement either to the presi- 
dent of the union or to one of the executive board of that or- 
ganization whom the president designates as his representative. 
The president's decisions are final unless reversed at the follow- 
ing joint conference. Although the president of the union has 
been acting as arbitrator since 1902, his decisions have been but 
rarely reversed. The great majority of his adjudications are 
concerned with the determination of prices on new ware, samples 
of which are sent to the central office of the union for his inspec- 
tion. In those cases where he has decided upon a certain price 
and that price is found by the joint conference to have been too 
high, the manufacturer is reimbursed for the excess wage pay- 
ments; conversely, a decision in favor of the employer, which 
might be reversed by the joint conference, forces the employer 
to make up the difference in wages. Instituted originally at the 
suggestion of the employers, the system of delegating to the 
president of the union the power of interpreting rules and of 
settling disputes has, during its existence of twelve years or 
more, worked admirably. With hardly an exception the deci- 
sions made by the president during his incumbency have met 
with general approval; and no record is as yet to be found of 
any suggestions, from either workman or manufacturer, which 
would so modify that section of the agreement as to remove 
from the president of the Glass Bottle Blowers' Association his 
present powers. 

The history of the operation of the agreement has been 
notably free from strikes and lockouts. The great centralization 
of power in the hands of the national organization and the ap- 
parent general opinion among the members of the union that 
such centralization is wise, has resulted in a universal support 
by the subordinate unions of the mandates of their national offi- 
cers and of the decisions of the joint conferences. When, for 
example, a general reduction in piece rates was adopted by the 



234 SELECTED ARTICLES 

conference, several local unions in San Francisco expressed 
their dissatisfaction with the agreement and struck. This viola- 
tion of the agreement was met with prompt action by the na- 
tional officers who ordered the strikers back to work. The strik- 
ers first denied that they had stopped work, but after a few 
days, when the charge was proved, they returned to work under 
the prices and rules against which they had revolted. The action 
of the national officers was upheld later by the national conven- 
tion of the union. 

Similarly, among the manufacturers, the attempts to violate 
the agreement by locking out the employees or by running shops 
under rules contrary to those adopted by the conference have 
been few and far between. In this case, however, compulsion 
upon the manufacturers has not come from the manufacturers' 
association. This organization, unlike the Glass Bottle Blowers' 
Association, has little control over its members and can, there- 
fore, do little in forcing its members to observe the terms of the 
joint agreements. The following debate at the conference of 
1905 indicates the position of the manufacturers' association in 
enforcing upon its members the decisions of the joint confer- 
ence: 

Mr. Hayes stated that it was a sort of rule among his predecessors at 
these conferences to ask the manufacturers whether they would abide by 
the decisions of the conference, but such a course has not been his policy, 
because he always assumed that the agreement would be lived up to by all 
of the manufacturers represented by the committee, but during the past 
year some had violated the agreement and some had intimated that the 
Executive Committee has been accused of extending special favors to some 
manufacturers while refusing them to others. . . . The chairman (a 
manufacturer) stated that when the agreement is signed it becomes a moral 
obligation of all manufacturers employing union labor to live up to them, 
but that there was nothing in the hands of the committee or the individual 
members thereof to enforce them. Any manufacturer could refuse to obey 
them, the power to enforce being wholly in the hands of the blowers. 

Although the power to compel obedience to the agreement 
and to the decisions of the president of the blowers' association 
in his settlement of disputes resides in neither the employers 
association nor the union, yet the desire of the manufacturers 
generally to avoid any action that might lead to a discontinuance 
of the annual conference and the strength of the union, which 
enables it to bring recalcitrant employers into line by threatening 
to withdraw their working force, are the two factors which oper- 
ate to prevent more frequent and more serious breaches of the 
agreement. 

It will have been observed in the foregoing discussion that 
the few suspensions of the agreement have arisen not from dis- 



PROBLEMS OF LABOR 235 

satisfaction with the adjudications of minor issues under the 
agreement, but have in reality constituted revolts against the set- 
tlement of the major issues embodied in the agreement. For 
instance, at the preliminary conference of 1909, Mr. Hayes re- 
ported that some of the manufacturers had refused to be bound 
by the agreement and had operated their factories during the 
so-called "summer stop" agreed upon by the last conference. 

Here, obviously, there was .no question of the interpre- 
tation or application of a rule of the agreement, but a de- 
liberate disregard of a rule whose meaning and intent was 
plain. This situation which is in a way a typical one suggests 
the following general proposition concerning the operation of 
the agreement : Where the national agreement lays down in 
detail working rules and piece rates, leaving to local adjust- 
ment matters of purely secondary importance, the disputes 
arising between conferences are likely to be, as they are in 
this particular instance, protests not against interpretation of 
the agreement, though there are undoubtedly some disputes 
of such a character, but against attempts to enforce the plain 
letter of the agreement. The remote design behind such 
protests is, of course, the desire to stir up a sentiment against 
the objectionable practice or rule and to have that rule 
amended or rejected at the following conference. 

The practical absence of any widespread violation of the 
agreement con be attributed primarily to two factors: (a) the 
character of the persons in the industry and (b) the national 
character of the agreement. 

a. The members of the Glass Bottle Blowers' Association 
have always been and are today highly skilled workmen, whose 
earnings were for many years far above those of skilled work- 
men in other industries. The high wages earned and the skill 
required to perform the work have apparently combined to form 
workmen of conservative instincts and of mature judgment. The 
character of the workmen has again and again been evidenced 
in the selection of officers of a high type and in the general sup- 
port by the membership of such legislation, as the voluntary re- 
duction of piece rates, which would in other industries have en- 
gendered the deepest hostility among the rank and file of the 
organization. In addition, problems following the introduction 
of machinery of the gravest import to all members have been 
met, if not always with perfect assurance and without petty 
squabbles, at least in an open-minded and intelligent fashion. 



236 SELECTED ARTICLES 

b. The national character of the agreement, which lodges in 
the national officers of the union the responsibility for the con- 
tent of the agreement and for its enforcement, imposes upon 
these officials a personal interest in the successful working of 
the agreement which makes for a more diligent and more 
stringent enforcement of its terms. 

From the standpoint of the machinery of the agreement, also, 
that clause which designates the president of the blowers' asso- 
ciation as the arbiter of inter-conference disputes, probably in- 
spires in the members of the union a respect for the agreement 
and a belief in its fairness which might otherwise not have ex- 
isted. The adherence of the employers to the agreement is per- 
haps even easier to explain. In the first place, this system of 
collective bargaining, by maintaining uniform wage scales and 
working rules throughout the whole of the industry has elim- 
inated the objectionable inequalities, as between different em- 
ployers, that are inevitable accompaniment of a decentralized 
system of collective bargaining. Second, the history of the 
agreement has been such as to modify to a considerable degree 
the attitude of the employers toward their workmen. For on 
three different occasions the union, after much pressure to be 
sure, has agreed to substantial reductions in wage rates. 



PRESENT INDUSTRIAL ISSUES 1 

The attention of the members of the American Iron and 
Steel Institute has of late been focussed on the attempt of lead- 
ers in the American Federation of Labor to unionize the iron 
and steel industry of this country. 

The present campaign was started at St. Paul, Minn., June 
13, 1918, by the adoption of a resolution introduced by delegate 
W. Z. Foster, couched in the following language : 

Whereas, The organization of the vast armies of wage earners em- 
ployed in the steel industries is vitally necessary to the further spread of 
industrial democracy in America; and 

Whereas, Organized Labor can accomplish this great task only by 
putting forth a tremendous effort; therefore, be it 

Resolved, That the executive officers of the American Federation of 
Labor stand instructed to call a conference, during this convention, of 

1 By Elbert H. Gary. From an address before the American Iron 
and Steel Institute, New York City, October 24, 19 19. Judge Gary is head 
of the United States Steel Corporation and was a member of President 
Wilson's White House Conference which was called to find some method of 
bringing capital and labor together and bringing about a full resumption 
of economic effort. 



PROBLEMS OF LABOR 237 

delegate^ oi all international unions whose interests are involved in the 
steef industries, and of all the State Federation and City Central bodies in 
the steel districts, for the purpose of uniting all these organizations into 
one mighty drive to organize the steel plants of America. 

The movement appears to have proceeded, under the general 
direction of Foster, without much result until June 13, 1919, 
when another resolution was adopted by the American Federa- 
tion of Labor at a meeting held in Atlantic City, which reads as 
follows : 

Whereas, Every labor union in America, regardless of its trade or in- 
dustry, has a direct and positive interest in the organization of the work- 
ers in the iron and steel industry, because the accomplishment of this 
vital task will greatly weaken the opposition of employers everywhere, to 
the extension of trade unionism and the establishment of decent conditions 
of work and wages; and 

Whereas, The organizing force now in the field working upon this vast 
project is altogether inadequate in strength to carry on the work in the 
Vigorous manner imperatively demanded by the situation; therefore, be it 

Resolved, That President Gompers of the American Federation of 
Labor, and Chairman of the National Committee for Organizing Iron and 
Steel Workers, be authorized to call a conference, during the convention 
of the American Federation of Labor of the heads of all international 
unions affiliated with the A. F. of L., to the end that they make arrange- 
ments to lend their assistance to the organization of the iron and steel in- 
dustry. 

President Gompers thereupon named the heads of twenty- 
four affiliated organizations to act as a committee to develop 
and carry out plans for unionizing the iron and steel industry 
pursuant to the resolutions mentioned. You are familiar with 
what has occurred since that time, and you are more or less ac- 
quainted with the history of the different union leaders who 
have been connected with the attempt to enlist the employes and 
to bring about a strike in the manufacturing works. The strike, 
which has been directed by the union labor leaders and was 
begun, so far as I am informed, without any request or authori- 
zation from the workmen themselves, has been conducted in the 
usual way. 

Immediately preceding the day fixed for ordering out the 
men, intimidating letters, large numbers of them being anony- 
mous, were sent to the families of the workmen threatening 
physical injury to the father or husband, damage to or destruc- 
tion of the home and kidnapping of the children unless the 
employe referred to should obey the order to strike. A num- 
ber of the workmen, who had joined the unions voluntarily, 
accepted the order to strike and others remained away from the 
factories through fear. 

In many, if not most of the mills, the larger number of em- 
ployes continued to work without interruption. At the begin- 



238 SELECTED ARTICLES 

ning, many of the workmen who attempted to continue their 
work and others who had remained at home through fear and 
attempted to return, were confronted in the public streets and 
elsewhere by strikers, or pickets, and importuned to engage in 
the strike; and many were assaulted and seriously injured. 
After protection was afforded by the police, sheriff's deputies, 
State constabulary, and in some cases State or National troops, 
the numbers resuming work increased appreciably from day to 
day until in many places operations are about normal. Taken 
as a whole, the situation at present is good and steadily improv- 
ing. 

The Sole Issue — Closed Shop or Open Shop 

It will be observed that the strike is not the result of any 
claim by any workmen for higher w r agcs or better treatment, 
nor for any reason except the desire and effort on the part of 
union labor leaders to unionize the iron and steel industry. As 
stated in the first resolution, the action taken was "for the pur- 
pose of uniting all these organizations into one mighty drive to 
organize the steel plants of America." 

Without discussing for the present the merit or demerit of 
labor unions, it may be observed that union labor leaders openly 
state that they seek to unionize or, as they say, "organize" the 
whole industry of this country. Those who do not contract or 
deal with unions, although they do not combat them, insist: upon 
absolute freedom to both employer and employe in regard to 
employment and the management of the shops. The non-union 
employers and employees both stand for the open shop. The 
unions argue for the closed shop or, as the leaders now insist, 
"the right of collective bargaining through labor-union leaders." 

Every proposition contended for by the labor unions at the 
National Industrial Conference at Washington led to domina- 
tion of the shops and of the men by the union labor leaders. 
Every position taken by the other side centered on the open shop. 
This is the great question confronting the American people and, 
in fact, the world public. From 80 per cent, to 90 per cent, or 
more of labor in this country is non-union. It is for them and 
the employers generally, and the large class of men and women 
who are not, strictly speaking, employers or wage earners to 
determine whether or not it is best, for the whole community 
to have industry totally organized. 

judging by experience, we believe it is for the best interest 
of employer and employee and the general public to have a busi- 



PROBLEMS OF LABOR 239 

ness conducted on the basis of what we term the "open shop," 
thus permitting any man to engage in any line of employment, 
or any employer to secure the services of any workman on terms 
agreed upon between the two, whether the workman is or is not 
connected with a labor union. The verdict of the people at 
large will finally decide this question, and the decision will be 
right. 

Why the Industrial Conference Failed 

I think the fundamental question submitted to the Confer- 
ence for recommendation to industries was the open shop ; that 
question apparently could not be decided by majority vote for 
the reason that the Conference was organized into three groups 
called Labor, Employers, and Public. No affirmative action 
under the constitution or adopted rules could be taken except 
by the unanimous vote of the three groups, each of which voted 
by a majority of all its members. It was necessary to have such 
a condition, as otherwise there could be no conference in which 
there would be an agreement between capital and labor, so-called. 

Collective Bargaining 

The union labor advocates stand for collective bargaining 
through the unions. The others favor collective bargaining 
through representatives selected by the employees themselves 
from their own numbers. 

The Employers' Group offered the following resolution: 

Resolved, That, without in any way limiting the right of a wage 
earner to refrain from joining any association or to deal directly with his 
employer as he chooses, the right of wage earners in private as dis- 
tinguished from Government employment to organize in trade and labor 
unions, in shop industrial councils, or other lawful form of association, to 
bargain collectively, to be represented by representatives of their own 
choosing in negotiations and adjustments with employers in respect to 
wages, hours of labor, and other conditions of employment, is recognized; 
and the right of the employer to deal or not to deal with men or groups of 
men who are not his employes and chosen by and from among them is 
recognized; and no denial is intended of the right of an employer and his 
workers voluntarily to agree upon the form of their representative rela- 
tions. 

The Employers' Group voted in favor of this resolution. 
The Public Group and the Union Labor Group voted against it. 
The Public Group offered the following resolution : 

The right of wage earners in trade and labor unions to bargain col- 
lectively, to be represented by representatives of their own choosing in 
negotiations and adjustments with employers in respect to wages hours of 
labor, and relations and conditions of employment is recognized. 

This must not be understood as limiting the right of any wage earner 
to refrain from joining any organization or to deal directly with his em- 
ployer if he so chooses. 



2 4 o SELECTED ARTICLES 

The Public Group voted in favor of this resolution. The 
Employers' Group and the Union Labor Group voted against it. 
The Union Labor Group finally offered the following resolu- 
tion : 

The right of wage earners to organize without discrimination, to bar- 
gain collectively, to be represented by representatives of their own choos- 
ing in negotiations and adjustments with employers in respect to wages, 
hours of labor, and relations and" conditions of employment is recognized. 

The Union Labor Group and the Public Group voted in 
favor of the resolution. The Employers' Group voted against 
it. Thereupon the Union Labor Group retired from the Con- 
ference. 

All through the Conference whenever the question of col- 
lective bargaining was discussed, it was apparent that the union 
labor leaders would not support any resolution in favor of col- 
lective bargaining except on the basis that collective bargaining 
meant bargaining through labor unions. 

As further evidence of the attitude of the union labor lead- 
ers it maj r be mentioned that in the twelve points published by 
the leaders who were conducting the strike they included and 
insisted upon the following: "Abolition of company unions." 

The Unions claim that collective bargaining through different 
forms of shop organization, made up of the employees tends to 
limit the extension of unions by increasing their numbers. The 
non-union employes and their employers insist that collective bar- 
gaining through labor unions means that employees are forced 
to join the unions, as otherwise they could not be represented. 
So it is perfectly clear that the whole argument returns to the 
main proposition of open or closed shop. 

In the Conference there was no objection offered by any 
one to some form of collective bargaining as between emplo}^ees 
and employers, provided both were free from outside represen- 
tation and direction. 

The Labor Group, so called, was made up of union labor 
leaders, leaving unorganized labor without special representa- 
tion. The same mistake seems to have been made by a large 
portion of the public which was made throughout the war, 
namely, that organized labor really represents the workmen or 
wage earners generally, notwithstanding, as a matter of fact, 
that at least 85 per cent, of the total are non-union — not mem- 
bers of any union organization, 



PROBLEMS OF LABOR 241 

The Employers' Group, in which were men first-class in 
even- respect, included men connected with large and important 
lines of industry, and also included several others some of 
whom at least should have been with the Labor Group. In 
selecting the Public Group there were overlooked thousands of 
vocations, professions, artisan and other lines of industry, all 
of whom are more or less affected by the cost of production, 
the expense of living and, therefore, the control and conditions 
of both labor and capital. 

Improvement of Working Conditions 

However, it would seem there were many objects which 
might appropriately have been considered by the Conference, 
and conclusions for recommendations arrived at by unanimous 
consent, which would be advantageous to the public good, and 
therefore to all mankind — such as working hours, living and 
working conditions, women's work, child labor, recreation, 
medical and surgical treatment, pensions, relief in times of 
stress, rates of compensation, schools, churches, and other edu- 
cational facilities. With the right disposition and intelligence, 
the Public Group, as sole survivor of the Conference, might 
have agreed upon recommendations to the industrial world 
which should be of substantial benefit. All of us are in favor 
of these principles, and of any others that may be suggested 
which we believe will be of real benefit to the wage-earners 
and to the general public. 

I conceive it to be proper in this family of industrial 
workers consisting of 2000 members of the most important 
basic industry, to claim that we have demonstrated in practice 
that we are upon a plane which is higher and better than ever 
before occupied by this industry in this country; that we have 
been striving to deserve the approval of all who are interested 
in our businees and our decisions; that we have sought the 
confidence of our emplo3^ees ; our customers, our competitors, 
our principals who own the properties we manage, and the 
general public. 

And yet it would be unfortunate if we could not discover 
opportunities for further improvement; if we failed to read or 
to listen to the criticisms of others ; if we let pass the requests 
or suggestions of our workmen for changes which they believe 



242 SELECTED ARTICLES 

would be proper concerning their employment; if we neglected 
to give our employees — individually or in groups — opportunities 
to discuss with the managers all questions of mutual interest; 
if we minimize in any degree the well-recognized fact that the 
public good is of prime importance and that private interests 
must be subordinated. It is a pleasure to me to know from 
long experience that I am appealing to a sympathetic audience in 
behalf of a continued effort, on our part, to be more worthy of 
the respect and confidence of ever}' right-thinking person who 
is familiar with our industrial life. 

Considerable has been said in public of late concerning the 
attempt to spread the doctrine of Bolshevism in this country. 
All of us have known for some time that this disease is persis- 
tent, and that there has been some inoculation even in this best 
of countries. Still, w 7 e deny that there is danger of serious 
trouble. There is only one way to treat this disease, and that 
is to stamp it out; to meet it boldly wherever it can be found; 
to expose it and give it no chance for development. 

In this free country, with its reasonable laws wisely admin- 
istered, its golden harvests, healthful climate, peace-loving in- 
habitants who are generous in contributions for relief and pro- 
tection, schools, churches and hospitals, there is no room except 
in the prisons for the anarchist, the bolshevist, or the other in- 
dividual who seeks to substitute the rule of force for the rule 
of law and reason. If there are slinking, desperate, murderous 
Bolsheviki in this country, even in small numbers, I believe the 
Secret Service Department of the Government should detect 
and expose them, and that the iron hand of justice should pun- 
ish them as they deserve. And, as I have faith in this country 
and in its institutions, I believe this will be done and done 
promptly. 

Any one who doubts the ability of the proper authorities to 
protect the persons and property of our people against bolshe- 
vism and other similar doctrines, fails to appreciate the courage 
of our citizens, and the terrible force and strength of subdued 
calmness when they are surrounded by threatened danger. 

For ourselves, let us be fair and just, considerate and de- 
termined, hopeful and complacent. We shall emerge from the 
waves of unrest which naturally follow the demoralization and 
terrors of war, and as a people we will be better and stronger 
than ever. 



PROBLEMS OF LABOR 243 

THE OPEN SHOP, ONCE A LOCAL ISSUE, IS 
NOW VITAL AMERICAN PRINCIPLE 1 

Open Shop Vital 

"The open shop presupposes the principle of Americanism. 
The closed shop, on the other hand, represents an un-American 
autocracy, and a confiscation of liberty and of property rights. 
If the closed shop should supervene in this country, the pres- 
ent cost of living would within four years seem low by com- 
parison, and the domestic as well as the foreign trade of the 
United States, which we now seem to hold securely, would in- 
evitably fall into other hands. The closed shop means death 
to commerce. There can be no misunderstanding of that effect 
and anyone having a primary knowledge of sound economics 
will accept it without question. Two years ago the open shop 
was a local issue, today it is a national principle. 



FACTS ABOUT THE NON-UNION SHOP 2 

Judge Gary has shown an active interest in the rights of the 
non-union workmen in the steel corporation's employ. He has 
deemed it wise to become a champion of their rights, and, as 
their champion, to refuse to recognize the duly appointed repre- 
sentatives which his organized workers have selected. 

The question of the so-called open shop has again received a 
great deal of attention, owing to Judge Gary's position. 

The principles involved in the union and the non-union shop 
have been discussed time and again, and for the present purpose 
will not be referred to. Sometimes a situation can be made 
much clearer by a study of the facts which have been proven, 
rather than by a discussion of principles or theory, for there can 
be much humbugging and much sophistry introduced into the 
discussion of a theoretical problem, but it is a very difficult thing 
to camouflage well-known facts. 

What are some of the most prominent facts connected with 
the so-called "open shop," where the employe must deal with 
his employer as an individual? 

Under the operation of the non-union foundry in the years 

1 From an address by William H. Barr, President American Founders' 
Association. 

2 From International Molders' Journal. 55:902-3. November, tqio. 



244 SELECTED ARTICLES 

gone by, the molders worked ten, eleven and twelve hours a day. 
In many foundries they not only failed to receive time and a half 
for overtime, but received no overtime at all, considering them- 
selves lucky if the bottom dropped in time to quit at the regular 
closing hours. 

There were no shop rules or regulations in which the molders 
had a voice; there was no minimum wage rate, but in almost 
every foundry there was some bone-headed, strong-backed young 
man who received a little more than the other molders because 
he was employed to set the pace, and the pace which he set was 
used as the pace which other molders must follow if they were 
to hold their jobs. 

In those good old days the f oundrymen discharged any molder 
who began to voice dissatisfaction with conditions in the shop, 
and if the discharge of one man was not sufficient, other inde- 
pendent spirits also were forced to go to the office and get their 
money. The result was intimidation of the other men in the shop 
— those who were paying for a little home, those who had a 
family of children whom they were endeavoring to put through 
the public schools. 

In those days of free and independent workmen, it was the 
foundrymen who determined w T hat the price should be on a piece 
work job, and the molder who did not like the foundrymen's 
price could quit the foundry, and, if he made too strong an ob- 
jection, would probably find himself, after having been dis- 
charged, blacklisted in the other foundries. 

And because of conditions that developed in the happy days 
of free and independent molders, which the "open shop advo- 
cate" desires to recall, many of the foundrymen, because of the 
suicidal underbidding for work, were unable to keep the sheriff 
from their doors. 

It was under the so-called "openshop" that the evils of child 
labor and unprotected female labor developed their most 
malignant features. 

It was under these conditions that the most dangerous ma- 
chinery went unguarded. 

It was under these conditions that great numbers of workers 
were compelled to toil for so many hours and at such a low wage 
rate per day that they deteriorated physically, that they were 
forced to live like animals herded together in barrack-like tene- 
ments, where each family had but two or three rooms. 

These conditions, which not only were unjust, but which 



PROBLEMS OF LABOR 245 

were destroying the physical and mental vigor of the workers, 
did not begin to change until the workers organized. The legis- 
lation abolishing child labor, protecting female labor, safe-guard- 
ing dangerous machinery, establishing workmen's compensation, 
only came after labor became well organized and had established 
union shops. The shorter workday, the minimum wage rate, the 
setting of piece prices by the committee and the foundrymen, 
only came into existence with the organizing of union foundries. 
If the non-union shops in the industries had established bet- 
ter conditions for their employes than existed in union shops, 
there would be no effective trade-union movement. The very 
existence of an active, practical, intelligent, well-organized and 
w T ell-financed trade-union movement is the strongest argument in 
existence to prove that the so-called open shop failed to establish 
as beneficial conditions for the workers as those which exist in 
plants where the workers are well organized. 



CLOSED SHOP VERSUS OPEN SHOP 1 

The increasing activity of trade unions in pressing their 
claims for recognition at the present time is resulting in a re- 
newal of the discussion of the merits of the closed shop versus 
the open shop. The campaign against the closed shop was so 
successful in certain industries a dozen or more years ago that 
the movement itself seems to have lost momentum because of its 
success. Just now, with unprecedented demands for all grades 
and classes of labor, the workers seem to have regained a part 
of their lost bargaining power and to have been placed, tem- 
porarily at least, in a position to again demand recognition from 
those employers who for a generation have refused to meet with 
the representatives of organized labor. Hence the reappearance 
of the arguments for and against the closed shop. 

For the most part this discussion is conducted by employers 
or their representatives, and is therefore stated in the terminol- 
ogy common to that group. But even when the press and the 
public give attention to the question, we are accustomed to accept 
the employers' definitions of the terms open shop and closed 
shop, apparently without stopping to inquire whether or not 
they are correct. We ignore labor's substitute terms which, al- 

1 By H. E. Hoagland. American Economic Review. 8:752-62. Decem- 
ber, 19 18. 



246 SELECTED ARTICLES 

though admittedly biased and unrepresentative, should at least 
be given consideration. If we are to be the impartial third party 
to industrial disputes, should we not learn how much truth there 
is in the contentions of each of the two other parties and, if nec- 
essary, adopt new terms which are representative and which are 
accurately descriptive? It is in the hope of contributing to this 
end that the writer has made the following analysis. In each 
case he has sought the expressions of the recognized leaders of 
both labor and capital in order that he may present the views of 
both parties fairly. Whether or not the conclusions of this arti- 
cle are accepted, it is high time to give attention to the facts 
upon which these conclusions are based in order to find some 
classification of terms which will be fair to both capital and 
labor and intelligible to the public. 

First, what are the facts to be considered? Whatever defini- 
tions we give to the terms open shop and closed shop we agree 
that we are trying to describe the relationship of trade unionism 
to industry. Perhaps the reason we do not agree upon definitions 
is that this relationship is too complex to be fully described by 
two simple terms. Some of these conditions are as follows : 

1. There is the shop which chooses to employ none but 
union members because the employer believes that the union can 
supply him with more efficient workmen than he can secure in 
any other manner. 

2. Then there is the shop which employs none but union 
members because the employer fears to incur the enmity of the 
labor organization to which his workmen belong. 

In both of these cases the employer sooner or later establishes 
or accepts a definite policy of employing only union members and 
incorporates this policy into an agreement with the union. 

3. Other employers, while agreeing with the union upon the 
terms of the labor contract, refuse to concede the exclusive em- 
ployment of union members. Such employers may concede a 
definite percentage, may show a preference for union men when 
other considerations are approximately equal (which may result 
in a shop with 100 per cent union membership), or may exercise 
a preference for non-union men though emplo}dng them at union 
terms. 

Some employers, through necessity, deal with their workmen 
only as individuals. This may be either because the workmen 
have no union or, if they have, because it is weak and unrepre- 
sentative of employees in that class of work. 

5. Still others, through choice, insist upon dealing with 



PROBLEMS OF LABOR 247 

workmen only as individuals, yet do not refuse absolutely to hire 
union members. Employers in this group are not indifferent to 
unionism but rather pursue a watchful policy, using means to 
weaken its union when the membership in the shop becomes 
threatening and ignoring the organization entirely when its rep- 
resentation in the shop is too small to cause concern. 

6. Then there are employers who not only refuse to deal 
with unions but who will not knowingly employ workmen who 
are union members. They will even dismiss employees imme- 
diately upon learning that they are members of a labor organiza- 
tion. 

7. Finally, the unions themselves occasionally introduce fur- 
ther complications, by refusing to permit their members to work 
in shops on strike or in shops declared unfair for any other 
reason. 

Even such a classification does not exhaust the possibilities 
for confusion in the popular discussions of open shop versus 
closed shop. For while it is popularly assumed that all unions 
pursue the same policy with respect to the degree of control 
they exercise over the supply of men in their trades, such is not 
the case. Some unions have no apprenticeship regulations and 
nominal initiation fees. They admit, without prejudice, any 
workman who can demonstrate his ability to perform the duties 
required in the trade. Other unions restrict their membership 
by refusing to admit qualified workmen except upon payment of 
extortionate initiation fees which amount in their operation to 
an effective obstacle to union membership. This in turn may 
mean at times an equally effective bar to employment at that 
particular trade. Still other unions limit the recruits to their 
trades by arbitrary apprenticeship ratios which are governed, 
more or less, by the needs of the trade, but which operate to 
maintain a monopoly of labor for the particular union members 
involved. Finally, some unions carry the restriction of ap- 
prentices to the extreme of limiting learners in the trade to the 
sons of union members. 

These facts indicate the complexity of the problem of union 
relationship to industry. Yet how different is the interpretation 
often given to a discussion of this problem. The very attempt 
to simplify a complex situation often results in the omission of 
important considerations. That this is true of the question of 
open shop versus closed shop will be made clear by the following 
analysis. 



2 4 8 SELECTED ARTICLES 

From the employers' point of view, the closed shop is a "mo- 
nopoly in favor of the particular members of the union which is 
a party to the closed-shop agreement" : not a "real monopoly" 
but one which is artificial and arbitrary because "outside its 
ranks there is a large supply of labor seeking employment, and 
it can maintain its monopoly only by preventing this potential 
supply from reaching its natural market and coming in contact 
with the correlative demand of the employer. . . . This pre- 
vention is accomplished in one way and in one way only — by the 
use of force and coercion in one form or another, either to keep 
the outsider from accepting employment or to keep the employer 
from accepting his services." 1 

Any employer who resists the demand for a closed shop ''is 
said to have an open shop" ; a shop which "is free to all, to the 
union man as well as the non-union man." 2 

Trade unionists, on the contrary, claim that "there is no 
closed shop." "When confronted by persons who persist in 
speaking, in private and public, of the 'closed shop/ the trade 
unionists recognize by that sign they are dealing with an enemy, 
employing the verbal ammunition of an enemy, distorting facts 
as an enemy, and without having the manliness and candor of a 
courageous enemy." 3 Open shops, according to trade unionists, 
"are in fact closed slwps against anion men and women/' 4 Or 
again, "In reality the open shop means only the open door 
through which the union man goes out and the non-union man 
comes in to take his place." 5 

For the most part economic writers have adopted the em- 
ployers' definitions of open and closed shop, without stopping 
to inquire whether or not there may be situations not covered 
by these two terms. Others, looking a little farther into in- 
dustrial relations, nevertheless use the one term, open shop, to 
describe any one of the following conditions: (i) A shop in 
which "union men or non-union men are hired indifferently" 
(2) a shop "entirely filled with union men"; (3) a shop "open 

1 Walter Drew, "Closed Shop Unionism," in Bulletin no. 16, National 
Association of Manufacturers, p. 4-5. 

2 W. H. Pfahler, in American Economic Association Publications, Third 
Series, vol. 4. p. 183, 186. 

3 Samuel Gompers, in American Federationist, vol. 18 p. 118. 

4 W. E. Bryan, in American Federationist, vol. 19, p. 321. 

5 Clarence Darrow, quoted in Current Literature, vol. 51, p. 654. 

6 For example, Professor Taussig after discussing the closed shop says, 
"The alternative is the open shop in which the employers deal with their 
laborers individually, or at least deal with them irrespective of their being 
members of the union." Principles of Economics, vol. II, p. 269. Most 
writers of economic texts follow Taussig in this classification. 



PROBLEMS OF LABOR 249 

only to non-union men." 7 No account is taken of the shops 
which could properly be classified under neither open shop as 
here defined nor the employers' definition of closed shop. 

Other writers, more careful of their terminology, accept the 
employers' definition of open shop but give a new name to the 
condition described by the trade unionists as an open shop in 
practice. 8 In a few instances attempts at a more exact classifi- 
cation have been made by economic writers. Professor Com- 
mons has made one such classification which meets some of the 
objections stated above. He says: 

The closed shop would be one viewed from the side of the contract, 
and would be designated as one which would be closed against the non- 
unionist by a formal agreement with the union; the open shop as one, 
where, as far as the agreement is concerned, the employer is free to hire 
union or non-union men; the union shop as one where, irrespective of the 
agreement, the employer as a matter of fact, has only union men. Thus 
an open shop, according to agreement, might be in practice a union shop, 
a mixed shop or even a non-union shop. The closed shop would, of 
course, be a union shop, but the union shop might be either closed or 
open. 9 

Marcus M. Marks has made a more minute classification in 
which, apparently, he has attempted to include all possible con- 
ditions of industrial relationship between labor and capital. His 
definitions are as follows: (1) The anti-union shop where the 
employer is "emphatically and frankly opposed" to the organiza- 
tion of his workmen. He will not knowingly employ a union 
man and will discharge those who join unions at any time. (2) 
The shop which is open because there is no union for the work- 
men to join. (3) The "typical open shop" where the employer is 
indifferent, neutral, or even friendly toward the union but will 
not grant it an agreement. Neither does he discriminate against 
union members. (4) The open shop which employs both union 
and non-union workmen but where the union either signs an 
agreement with the employer or reaches a mutually satisfactory 
understanding with him. (5) The union shop, all of whose 
workmen are union men though the employer may not even- 
know of the existence of the union. At any rate he does not 
grant it recognition. (6) The closed shop with the open union. 
The employer is free to hire whomsoever he chooses provided 

7 C. W. Eliot, Future of Trade Unionism and Capitalism, p. 62-63. 

8 F. T. Carlton, History and Problems of Organized Labor, p. 122. 
defines open shop as follows: "An open shop is one in which union and 
non-union men work or may work, side by side. No discrimination is 
practiced against union or non-union men." Professor Carlton then divides 
other shops into anti-union shops closed to union men, closed shops wrri» 
open unions, and closed shops with closed unions. 

9 Labor and Administration, p. S9-90. 



2 5 o SELECTED ARTICLES 

they join the union at once. The union of course receives 
recognition. (7) The closed shop with the closed union. New 
workmen are obtained only by application to the business agent 
of the union and if an employee loses standing with the union 
the employer agrees to discharge him upon the request of the 
union. 

But why call a shop "open" if the employer deliberately hires 
none but non-union men? Or why speak of a union shop if the 
workers therein give so little attention to their organization that 
the employer does not even know of its existence? And surely 
there is a very great difference between the "open shop" which 
refuses to recognize the union and the one which, while hiring 
non-union men as well as union men, gives the union a voice in 
the determination of the conditions under which its members 
work. 

Furthermore, we are accustomed to think of the open shop 
as the typically American, man-to-man method of agreement 
upon the terms of the labor contract. We picture the individual 
employer discussing with the individual workman the job in 
question, each trying to drive a good bargain in typical Amer- 
ican fashion. But openship, so-called, is often established, not 
by the action of an individual employer, but by the decision of 
an employers' association, some of whose members may even be 
enjoined by court action from exercising their individual wills 
in determining relations with their employees, wthout suffering 
severe indemnities to the association. 

Frequently, the employers' association supplies individual 
contracts to its members with instructions not to hire any work- 
men who refuse to sign them. A typical contract of this nature 
reads as follows : 

I, the undersigned in consideration of the signing of a protection 
agreement ... do hereby agree as part of the consideration thereof: 

I shall not directly or indirectly counsel, advise, participate or aid in 
the declaration of any strike against the business of any present or future 
member of said Association, nor in the establishment or continuance there- 
of, nor in any measure, financial or otherwise, designed to make it effec- 
tive. . . . 10 

A part of such individual contract or a supplementary con- 
tract may even go farther in limiting the activity of the indi- 
vidual worker. In the case cited above one form of contract, 
supplied to the employers by the association with instructions 
to require every employee to sign it, read in part as follows: 

10 H. E. Hoagiand, Collective Bargaining in the Lithographic Indus- 
try, p. 95-6. 



PROBLEMS OF LABOR 251 

"You represent to us that you are not a union man and agree 
not to hereafter join any union without our written consent." 11 
Very often too the practice of open-shop employers' associa- 
tions in maintaining permanent employment bureaus or agencies 
creates an effective bar to the active union man. In speaking 
of the requirement of an applicant seeking employment through 
such a bureau one writer who is in sympathy with the method 
says: 

He is required to give a complete record of himself, including the 
reasons why he left the shops' where he was formerly employed. All the 
facts about him are put on a card which is kept in a permanent card 
catalogue. The secretary of the agency makes an investigation of the 
man's record. ... In this way the employers find out who the dis- 
turbers are, and they are kept out of the shops. 12 

These examples could be multiplied many times to show that 
the open shop is not always free to all, the unionist as well as 
the non-unionist; and that on the other hand the closed shop 
is not always kept closed by the use of force or some form of 
coercion. Neither is it true that all shops recognizing the union 
are kept open by the union nor that all open shops are closed 
to union members. It appears quite clear, therefore, that we 
must reject the classification of open shop and closed shop if we 
are really desirous of finding names which are accurately de- 
scriptive. 

In the early history of unionism in this country the terms 
open shop and closed shop were not used. Then shops were 
either "union" or "non-union" : union if the organization had a 
voice in establishing working conditions; non-union if it did 
not. 13 Occasionally non-union shops were designated as scab 
or rat shops if the employer kept union men out. For the most 
part union shops were open to non-unionist as well as to union 
members for the unions of those early days had a naive idea 
that they could legislate for the entire trade, whether or not 
they controlled the supply of labor in the trade. 

Gradually the unions learned the necessity of bringing pres- 
sure to bear upon recalcitrant employers and hence they began 
to refuse to permit their members to work in shops on strike. 
The "closed" shop was one closed to union members. It be- 
came an "open" shop when the union declared the strike off and 
permitted its members to return to work. Somewhat later the 

11 Ibid., p. 96. 

12 1. F. Marcosson, in World's Work, vol. n, p. 6963. 

13 F. T. Stockton, Closed Shop in American Trade Unions, p. 14. 



252 SELECTED ARTICLES 

union, upon winning a strike, stipulated in the terms of peace 
that the shop be closed to non-unionists. The employers seized 
this conception of closed-shop unionism and have since made 
it the chief point of attack in their anti-union propaganda. 

The publicity given to the open-shop movement of the past 
fifteen years has made it appear that there are but two kinds of 
shops to be considered : the closed shop which keeps out the non- 
union workman, and all others, collectively called open shops. 14 
At the time the terms were first used they may have been not 
far from accurate in their description of existing conditions. 
But certainly since that time the methods used by some of the 
so-called open-shop emplo3^ers' associations have made necessary 
a new classification of terms to fit present conditions. The Fed- 
eral Commission on Industrial Relations has recognized this 
need and it is interesting to note that the one resolution which 
the commission adopted by unanimous vote read as follows : 

Whereas the commission finds that the terms "open shop' 5 and "closed 
shop" have each a double meaning, and should never be used without 
telling which meaning is intended, the double meaning consisting in that 
they may mean either union or non-union: Therefore, for the purposes 
of this report, be it 

Resolved, That the Commission on Industrial Relations will not use 
the terms "open shop" and "closed shop" but in lieu thereof will use 
"union shop" and "non-union shop." 

The union shop is a shop where the wages, the hours of labor, and 
the general conditions of employment are fixed by a joint agreement be- 
tween the employer and the trade union. 

The non-union shop is one where no joint agreement exists, and where 
the wages, the hours of labor, and the general conditions of employment 
are fixed by the employer without cooperation with any trade union. 15 

This distinction is essentially that made by trade unionists 
themselves. In a recent editorial in the American Federationist 
Mr. Gompers outlines the case as follows : 

When an employer forms a treaty with the union, formal or tacit, his 
shop is union, even if the union consents for the time being not to disturb 
any non-union men among the employees. If the employer will not treat 
with the union or pay the union scale, his shop is non-union though among 
its employees may be union members. The deciding point as to whether 
a force of employees is union or non-union is the employer's actual recog- 
nition of union regulations. 16 

Are not the terms union shop and non-union shop more accu- 
rately descriptive than the terms open shop and closed shop? 
It is not the presence of union members in a shop that is im- 

14 The open-shop movement has attained such proportion that open- 
shop schools and open-shop employment bureaus are very common. Open- 
shop literature is voluminous in amount. We even hear of Los Angeles 
and Washington as model open-shop cities. 

16 Final Report p. 265. 

16 American Federationist, vol. 17, p. 885. 



PROBLEMS OF LABOR 253 

portant but rather their activity in securing or demanding a voice 
in the determination of the conditions under which they work. 

Should we adopt this classification, there would be two sets 
of distinctions to be kept in mind. First, that between the union 
shop and the non-union shop : the union shop being one in 
which the union is a party to the wage bargain and the non- 
union shop being one in which the employer refuses to deal with 
labor in its collective capacity. Thus far we accept the classifica- 
tion suggested by the trade unionists. But there is a second dis- 
tinction, equally important, which the trade unionists are not so 
ready to admit. The union shop may be either closed or open. 
Most unions accept the principle at least of the closed union shop. 
Whether or not they insist upon its enforcement depends upon 
expediency. In a few instances, notably in the transportation 
industry, open union shop seems to operate fairly successfully. 
Here the whole competitive field is covered by the agreement. 
The association of employers and the union fix, by joint action, 
the terms of employment for every position within this field, 
whether occupied by union members or non-unionists. The con- 
ditions essential to the success of the open union shop are: (1) 
The presence of a strong and well disciplined organization on 
each side; (2) the same scale of work and wages for both union- 
ist and non-unionists; and (3) the settlement of all complaints, 
whether affecting union members or other workmen, by joint 
action of representatives of the union and the employers' asso- 
ciation. In other words the union must act as the agent of all 
workers and must be protected from undercutting b}' non-mem- 
bers. 

The non-union shop may also be, temporarily at least, either 
open or closed. If the employer does not fear the growth of 
unionism, he may not discriminate against union members in 
hiring workmen, even though he refuses to deal with them as 
such. On the other hand the employer may choose to keep union 
members out of his shop. In this case it seems that the only 
proper term to apply is closed non-union shop. 17 The employer 
is generally opposed to the closed union shop and almost never 
grants it voluntarily. When he is forced to grant such terms 
to the union he often considers the agreement merely a truce to 

17 The same name would necessarily be applied, of course, to the shop 
which is temporarily closed to union members by the union itself on ac- 
count of strike or other disagreement with the employer. However, these 
cases are relatively rare and can be described when necessary by a state- 
ment of the conditions surrounding them. 



254 SELECTED ARTICLES 

be broken when opportunity offers. The temporary locus of the 
balance of advantage determines whether or not closed union 
shop shall operate. In many instances prosperous times bring 
closed-union-shop agreements. In succeeding dull periods the 
aggressive union members are dismissed and the remainder give 
up their affiliation in return for the retention of their jobs. 

In passing judgment upon the closed union shop we should 
distinguish carefully between the closed union shop maintained 
by the open union and that maintained by the closed union. Ob- 
taining membership in an open union is analogous to securing 
citizenship papers in a democracy. In both no groups are ex- 
cluded except those whose members cannot attain the standards 
set for the entire organization. In each case individuals are ex- 
cluded whose past conduct has been inimical to the welfare of 
the group. And in both the democracy and the open union quali- 
fied applicants for membership are admitted as soon as they 
satisfy the minimum requirements of admission. The closed 
union shop maintained by the open union has many supporters 
among economists and other members of the so-called third 
party to industrial disputes. 18 

Closed union shop maintained by a closed union, on the other 
hand, is wholly indefensible from the standpoint of social judg- 
ment. It operates for the benefit of the few and those few not 
always the most competent or the most deserving. Trade union- 
ists themselves recognize the indefensibility of such a situation 
and for the most part deny the existence of the closed union. It 
is undoubtedly true that the practice of patrimony to keep down 
the numbers in a trade and the maintenance of prohibitive initia- 
tion fees or other artificial restrictions upon the entrance of com- 
petent workmen into a given industr}^ are losing ground among 
union leaders themselves. 

Likewise the closed non-union shop is equally indefensible 
unless we insist upon a very narrow interpretation of the sacred- 
ness of private property and the right of its owner to do with 
it as he wills. The spy systems used by some employers not only 
drive out of employment the trouble making agitator, but they 
keep all workmen in a state of mind which can hardly be de- 

18 Professor Seligman, for example after expressing himself as favor- 
able to trade unions, says that unless the condition described here as 
closed union shop is maintained, the union itself will often cease to exist. 
Principles of Economics, p. 441. Professor Fetter, on the other hand, 
opposes closed union shop in any case and relies upon public sympathy to 
secure for labor higher wages when necessary. Principles of Economics, 
p. 250. 



PROBLEMS OF LABOR 255 

scribed as fitting for liberty loving citizens of a free country. 
Employers agree that the closed non-union shop is indefensible. 
At least they are accustomed to deny its existence. It has been 
a very effective weapon in the hands of employers who have 
wished to establish what they have called open shop. It is 
harder to detect than the closed shop maintained by the closed 
union for its success depends to a large extent upon its secrecy, 
other pretexts being used as excuses for the dismissal of active 
union members. 

Open shops, whether union or non-union, are essentially un- 
stable. The union employees continually attempt to organize 
the non-union workers and to establish closed union shop. The 
employer is equally anxious to prevent the complete unionization 
of his shop and will often resort to dismissal of active unionists 
if their activity seems to promise success. 

In conclusion, the writer believes that because our present use 
of the terms open shop and closed shop is misleading and is not 
accurately descriptive of industrial relations in modern industry, 
we should eliminate these terms from economic discussions. As 
substitute terms we should adopt union shop to describe the es- 
tablishment in which the union is a party to the wage bargain 
and non-union shop to describe the establishment which refuses 
to deal with labor organizations. The closed union shop would 
then correspond to what is now called the closed shop. While 
to avoid the confusion which arises under the present use of the 
term open shop, we would use three terms, open union shop, 
open non-union shop, and closed non-union shop, according to 
the degree of recognition given the union by the employer and 
the extent of his efforts to keep union members out of his es- 
tablishment. 



THE COMMON PEOPLE'S UNION 1 

One of the most interesting and perhaps momentous develop- 
ments of this momentous time is the "Middle Class Movement." 
It is a very recent thing, probably starting in North Germany 
early in the present year, when the professional men of certain 
towns banded together against the threatened "proletarian dic- 
tatorship" of Spartacide workingmen and brought the revolu- 
tionary laborites to terms by threats of a bourgeois "counter- 

1 By Lothrop Stoddard. World's Work. 39:102-4. November, 1919- 



256 SELECTED ARTICLES 

strike." That first revelation of middle class power was not 
destined to remain an isolated phenomenon. During the suc- 
ceeding months distinctly middle class movements have appeared 
in every quarter of the globe. Even far-off South America and 
Japan to-day have their stirrings of middle class self-conscious- 
ness, while as far back as last April, England saw the formation 
of a "Middle Classes' Union" and has ever since played the lead- 
ing role in the middle class cause. 

The reason for this nascent middle class solidarity is per- 
fectly clear. It is a defensive reaction against the rapidly in- 
creasing pressure of the high cost of living. The sky-rocketing 
of prices has of course hit all classes of societ}', but the middle 
classes have unquestionably been hit the hardest. It is they who 
have been the war's greatest sufferers. And furthermore it 
must not be forgotten that the war merely intensified a process 
which had been going on for man} 7 3 r ears. Ever since the closing 
years of the Nineteenth Century prices have been rising rapidly. 
When the war broke out in 1914 prices were almost double 
what they had been twenty years before. The war immensely 
accelerated this upward progress. The five years after 1914 saw 
a further doubling of prices — a five-year rise as great as that of 
the previous twenty years. 

Of course this hurts everybody. But note how superlatively 
it hurts the middle classes. "The middle classes" is a somewhat 
elastic term, but it has been well defined by one of the leaders 
of the English middle class movement as "the people with the 
middle interests." The middle classes are composed preemi- 
nently of salaried persons and those deriving moderate incomes 
from "safe" investments, annuities, pensions, and the like. Now 
it is precisely these things which have lagged farthest behind 
prices. Both capital and labor, being self-conscious and well 
organized, have managed to keep fairly well up with the pro- 
cession; indeed, to certain sections of both, the war-years in 
particular have yielded a harvest of speculative profits and 
fancy wages which to-day put them ahead of the game. But 
the middle class man is generally in very evil plight. Salaries 
show none of the buoyancy of wages and tend to remain an- 
chored to the schedules fixed during the relatively stable price- 
level of a generation ago. When we come to the matter of in- 
comes, the situation is even worse. 

Consider the present plight of a typical middle-class family 
which had lived comfortably within its income in the year 1896 



PROBLEMS OF LABOR 257 

and had then thriftily invested a few hundred dollars annually 
in "gilt-edged" securities (bonds or preferred stock), savings- 
bank deposits, long-term life insurance endowment policies, and 
the like. Perhaps there was also a government pension to the 
grandfather, a Civil War veteran, a small annuity, or similar 
supplementary source of income. The head of the house, of 
course, a salaried man. Now what is the condition of that 
family to-day? To begin with, it costs just three times as much 
to maintain its 1896 standard of living. The family will certainly 
cling desperately to that standard, for, while comfortable, it was 
not extravagant and was based upon deep-seated traditions and 
ideals. Yet how pay the threefold bills? The main source of 
income — the salary, has increased in nothing like a threefold 
proportion. The "gilt-edged" securities bring no increased divi- 
dends, stand very low on the 'change, and, if "railroads," may be 
almost worthless. In fact, every dollar owned by that family in 
1896, whether invested in bonds, stocks, savings-bank deposits, 
insurance policies, annuities, or pensions, has depreciated, in 
actual purchasing power, to thirty-five cents, and every dollar 
invested in 1914 has depreciated to fifty cents. Furthermore, 
the war has imposed heavy collateral burdens, as increased tax- 
ation, notably income-tax. Lastly, the current wave of social 
unrest, with its especial hostility to private property and its 
especial hatred of the middle classes, tends further to unsettle 
confidence and depress values. 

Such is the condition of the middle classes throughout the 
world to-day. 

"Middle Classes' Union" in England 

England having been the country where middle class feel- 
ing and the necessity for middle class action were first appre- 
ciated, it is not strange to find England taking the lead in the 
current middle class movement. The English movement was 
formally launched in April, 1919, when a convention was held 
in London to inaugurate the formation of a "Middle Classes' 
Union." The chairman, Mr. Kennedy Jones, stated in his 
opening address that the organization was to be formed to ob- 
tain protection for those members of the community who 
could in no other way protect their domestic and political 
interests. "If you are properly organized," concluded Mr. 
Tones, "you will become the greatest force in the nation. You 
can possibly hold up all the workers, you could hold up the 



258 SELECTED ARTICLES 

capitalists, or you could even hold up the Government. You 
must see you are not squeezed or crushed and that you are 
placed in such a position as will necessitate a fair and square 
deal in all things, and the right to live." The meeting adopted 
a constitution, its preamble stating: "We are being taxed 
out of existence. We are being exploited for the benefit of 
the lower classes or for the benefit of the financial groups and 
profiteers in the upper classes." The Union's aims were thus 
officially stated in its constitution : 

To promote mutual understanding between all classes of the com- 
munity and secure an equitable distribution of national taxation. 

To obtain the removal of unfair burdens on the middle classes, and to 
enable them by collective action to protect their interests from legislative 
or industrial oppression. 

To scrutinize and watch all legislation and administration, and to 
secure suitable amendments of the law where the interests of the middle 
classes are unfairly prejudiced. 

To support, by legal action if necessary, the interests of any member 
which raise questions of general principle affecting the middle classes. 

This formal pronouncement was elaborated in the official 
statement of Captain Stanley Abbott, General Secretary of the 
Union, who said : 'The Middle Classes' Union is not concerned 
with social distinctions or religious variations. What it is con- 
cerned with is the interests which exist between those of Cap- 
ital' and those of Labor. In this sense the Middle Classes arc 
the people with the Middle Interests. In political and economic 
affairs there are three main sections ; two of them are the ex- 
tremists—call them what you will — the Upper and the Lower, 
the Right and the Left, the Monopolist and the Syndicalist. The 
third is the Middle Classes. And it is for the individual to de- 
termine whether he or she comes within this section — as a con- 
sumer, as a taxpayer, as a law-maker. Capital is organized for 
self-preservation Labor is organized for self-advancement. 
But in the operations as between these two sections, the other — 
the unorganized Middle — the section which is the butt, the 
buffer, and the burden-bearer when Capital and Labor are con- 
tending — has no locus standi and no representation. Within 
this body are the brain-workers — the commercial and trading, 
the professional and administrative and managerial classes, and 
those whose income is derived from pensions or savings. Self- 
analysis should indicate one's place. The domestic or internal 
interests of a particular profession or business may be served 
by the profession or business societies; but, so far as general 
political and economic questions are concerned, those who con- 
stitute these bodies, together with the vast mass of the middle 



PROBLEMS OF LABOR 259 

classes who are not attached to or identified with any such 
specialized organization, are incapable, under present conditions, 
of any power of concerted action. The M. C. U. exists to weld 
together those unorganized and unrepresented middle classes 
into a strong, practical, coordinated entity for the protection of 
common interests. The very existence of a representative and 
powerful organization such as this will produce a moderating 
and a stimulating influence in the. political and economic life of 
the nation.' , 

In the comparatively short period since its inauguration the 
English Middle Classes' Union has been conducting an active 
campaign and appears to be meeting with a good measure of 
success. 

Unions of the Professions 

England seems to be the only country where a general middle 
class organization for general ends has as yet been formally at- 
tempted. But in a number of countries in different parts of the 
world, including England itself, middle class organizations of 
single professions or allied callings looking toward the protec- 
tion and betterment of their special circles are to-day in opera- 
tion. I have already mentioned the middle class organizations 
of North Germany which may be considered the pioneers of 
the movement. These organizations sprung spontaneously into 
being in several North German cities early in the present year 
when Spartacides (i. e., German Bolsheviki) had acquired local 
control. But the oppressed bourgeois presently took the "class 
solidarity" leaf out of the Spartacides' book; at least, the mem- 
bers of the allied group of professions connected with the public 
health took such action. The amalgamated doctors, nurses, 
hospital attendants, pharmacists, civic health officials, and kin- 
dred callings declared "counter strikes," and sick proletarians 
could thenceforth obtain neither drugs nor medical attendance, 
while proletarian patients were left unattended in their beds. 
So effective was this action of only a part of the middle classes 
that in at least two cities the Spartacides were forced to terms 
without any aid having been extended the counter strikers by 
the Federal troops. 

The United States has not yet witnessed a middle class union 
of the general type, but local organizations of single professional 
and business callings have already begun. For instance, toward 
the end of August a union of clerks and other salaried em- 



26o SELECTED ARTICLES 

ployces was formed at New Orleans for mutual protection and 
for the raising of salaries, which, unlike laborers' wages had 
either advanced very slowly or had remained at an absolute 
standstill. The new organization declared that clerks and other 
salaried men who were able to support their families in comfort 
and even lay aside savings only a few years ago now found 
themselves hard pushed to obtain the bare necessaries of life, 
and that therefore an immediate amelioration of their eco- 
nomic condition was imperative. And an investigator just re- 
turned from the Middle West reports widespread interest in 
what he calls "white collar" unions. 

"In ever}* city," he says, "I heard much talk of the impending 
organization of the 'white collar' occupations on a labor-union 
basis. I did not find that any important movement in this direc- 
tion had been set on foot anywhere in the Middle West, but in 
talking with clerks, stenographers, newspaper men, and others 
employed on salaries I found them intensely curious as to what 
had been done in that direction in the East. Newspaper men 
were eager to learn about the unionizing of the news writers 
of Boston and other cities. Man}* had heard of the Union of 
University Professors and its affiliation with the American Fed- 
eration of Labor and were disappointed when I could not give 
them details. There was much interest in the Union of Federal 
Employees. But to most of these office workers, what had 
dramatized for them the idea of a union of 'white collar' occu- 
pations was the actors' strike. 

" 'We've been thinking we were different, somehow, from 
the men in the pressroom and composing room,' said an intelli- 
gent young woman stenographer in a newspaper office. 'But I 
notice every time they ask for more pay they get it, and if E. H. 
Sothern and Marie Dressier aren't too proud to belong to a 
union, why should we be? The boss thinks he's treating us 
pretty well, giving us a 50 per cent increase in salary. But in 
his own paper the other day he printed the figures that show 
the cost of food and clothing here in Cleveland has gone up 
80 per cent., and my rent's been doubled. And so has the price 
of the paper and the profits.' " 

From all this the lesson seems to be clear. Throughout the 
world the middle classes are less adjusted to rising price levels 
than are either the upper or the lower strata of society. They 
are consequently suffering more than any other class. They are 



PROBLEMS OF LABOR 261 

beginning to see the benefits obtained by other classes through 
cooperation and are rapidly overcoming the handicaps which 
have hitherto prevented them from initiating corporate action. 
Now that such action has actually begun in many quarters and 
has apparently been both feasible and successful, it would seem 
as though a rapid development of middle class activity would 
characterize the immediate future. 



THE UNION LABEL 1 

The union label — what does it mean? That is a question 
often asked, and it receives a variety of answers. In order, 
therefore, to get it properly before the public it becomes neces- 
sary to make application of the principle involved in its use in 
other directions than from the standpoint of the union man. 

Churches organize, adopt names and creeds of faith and re- 
fuse to tolerate any infringement upon their right to worship 
according to their standard of faith and practice. This the 
union label does for the union workmen. 

Clubs and associations adopt the insignia and recognition to 
prevent fraud and imposition. This is the mission of the union 
label. 

Firms and corporations have distinguishing marks which 
they jealously guard and protect. So does the organized 
worker guard and protect the union label. 

Authors and writers secure copyrights as a shield from 
plagiarism of the products of their brain and pen. The union 
workman uses the label as a shield for the product of his labor 
and brawn. 

Inventors secure letters patent to prevent infringement upon 
their right. The union label serves the same purpose for or- 
ganized labor. 

The manufacturer places his trade mark on the products of 
his shop or factory. The label performs the same service for 
the worker who brings forth these products. 

It therefore seems plain that the same law which steps in 
and protects those whose interests lie in the various arteries of 
trade and commerce should step in and protect the worker in 
the use of his distinguishing mark. 

1 Amalgamated Journal. March 27, 1919. 



262 SELECTED ARTICLES 

THE INCORPORATION OF TRADES UNIONS 1 

Lest what I say on the advisability of incorporating trade 
unions be misunderstood, it seems wise to state at the outset my 
views of their value to the community. 

They have been largely instrumental in securing reasonable 
hours of labor and proper conditions of work; in raising ma- 
terially the scale of wages, and in protecting women and chil- 
dren from industrial oppression. 

The trade unions have done this, not for the workingmen 
alone, but for all of us; since the conditions under which so 
large a part of our fellow citizens work and live will determine, 
in great measure, the future of our country for good or for 
evil. 

This improvement in the condition of the workingmen has 
been almost a net profit to the community. Here and there 
individuals have been sacrificed to the movement; but the in- 
stances have been comparatively few, and the gain to the em- 
ployees has not been attended by a corresponding loss to the 
employer. In many instances, the employer's interests have been 
directly advanced as an incident to improving the conditions of 
labor; and perhaps in no respect more than in that expressed 
by a very wise and able railroad president in a neighboring 
State, who said : "I need the labor union to protect me from 
my own arbitrariness." 

It is true that the struggle to attain these great ends has 
often been attended by intolerable acts of violence, intimidation 
and oppression; but the spirit which underlies the labor move- 
ment has been essentially noble. The spirit which subordinates 
the interests of the individual to that of the class is the spirit 
of brotherhood — a near approach to altruism; it reaches pure 
altruism when it involves a sacrifice of present interests for 
the welfare of others in the distant future. 

Modern civilization affords no instance of enlightened self- 
sacrifice on so large a scale as that presented when great bodies 
of men calmly and voluntarily give up steady work, at satis- 
fctory wages and under proper conditions, for the sole reason 
that the employer refuses the recognition of their union, which 
they believe to be essential to the ultimate good of the working- 
man. If you search for the heroes of peace, you will find many 

1 By Louis D. Brandeis. Address delivered to the Economic Club of 
Boston, December 4. 1902. 



PROBLEMS OF LABOR 263 

of them among those obscure and humble workmen who have 
braved idleness and poverty in devotion to the principle for 
which their union stands. 

And because the trade unions have accomplished much, and 
because their fundamental principle is noble, it is our duty, 
where the unions misconduct themselves, not to attack the 
unions, not — ostrich-like — to refuse to recognize them, but to 
attack the abuses to which the unions, in common with other 
human institutions, are subject, and with which they are af- 
flicted; to remember that a bad act is no worse, as it is no 
better, because it has been done by a labor union and not by 
a partnership or a business corporation. If unions are lawless, 
restrain and punish their lawlessness; if they are arbitrary, re- 
press their arbitrariness; if their demands are unreasonable or 
unjust, resist them; but do not oppose the unions as such. 

Now, the best friends of labor unions must and should 
admit that their action is frequently hasty and ill-considered, 
the result of emotion rather than of reason; and that their ac- 
ion is frequently arbitrary, the natural result of the possession 
of great power by persons not accustomed to its use; and that 
the unions frequently ignore laws which seem to hamper them 
in their efforts, and which they therefore regard as unjust. 
For these defects, being but human, no complete remedy can 
be found; but the incorporation of labor unions would, among 
other things, tend in some measure to correct them. 

The general experience in this country, in respect at least to 
the great strikes, has been that success or failure depended 
mainly upon whether public opinion was with or against the 
strikers. Nearly every American who is not prejudiced by his 
own peculiar interests recognizes the value of labor unions. 
Nearly every American who is not himself financially interested 
in a particular controversy sympathizes thoroughly with every 
struggle of the workingmen to better their own condition. But 
this sympathy for the workingmen is quickly forfeited when- 
ever the conduct of the strikers is unreasonable, arbitrary, law- 
less or unjust. The American people with their common sense, 
their desire for fair play and their respect for law, resent such 
conduct. The growth and success of labor unions, therefore, 
as well as their usefulness to the community at large, would be 
much advanced by any measures which tend to make them more 
deliberate, less arbitrary, and more patient with the trammels 
of a civilized community. They need, like the wise railroad 



264 SELECTED ARTICLES 

president to whom I referred, something to protect them from 
their own arbitrariness. The employer and the community also 
require this protection. Incorporation would in some measure 
help to this end. 

When, in the course of a strike, illegal acts are committed, 
such as acts of violence or of undue oppression, the individual 
committing the wrong is, of course, legally liable. If the act is 
a crime, the perpetrator may be arrested and punished; if it is 
a mere trespass, he may be made to pay damages, provided he 
is financially responsible; and if money damages appear not to 
be an adequate remedy injunction against the wrongful 
acts may be granted by a court of equity. If the injunction is 
disobeyed, the defendant may be imprisoned for contempt. 

Now, it seems to be a common belief in this country that 
while the individual may be thus proceeded against in any of 
these ways, the labor union, as such, being unincorporated, that 
is, being a mere voluntary association, cannot be made legally 
responsible for its acts. The rules of law established by the 
courts of this country afford, it is true, no justification for this 
opinion. A union, although a voluntary unincorporated associa- 
tion, is legally responsible for its acts in much the same way 
that an individual, a partnership or a corporation is responsible. 
If a union, through its constituted agents, commits a wrong, 
or is guilty of violence or of illegal oppression, the union, and 
not merely the individuals who are the direct instruments of the 
wrong, can be enjoined or made liable for damages to the same 
extent that the union could be if it were incorporated; and the 
funds belonging to the unincorporated union can be reached 
to satisfy any damages which might be recovered for the wrong- 
done. The Taff Vale Railway case, decided last year in Eng- 
land, in which it was held the Amalgamated Society of Rail- 
way Servants could, as a union, be enjoined and be made liable 
in damages for wrongs perpetrated in the course of a strike, 
created consternation among labor unions there, but it laid down 
no principle of law new to this country. 

Numerous instances may be found in our courts where labor 
unions have been enjoined, and in our own State, more than 
thirty years ago, an action was maintained against a union for 
wrongfully extorting from an employer a penalty for having 
used the product of "scab" labor. But while the rules of legal 
liability apply fully to the unions, though unincorporated, it is, 
as a practical matter, more difficult for the plaintiff to conduct 



PROBLEMS OF LABOR 265 

the litigation, and it is particularly difficult to reach the funds 
of the union with which to satisfy any judgment that may be 
recovered. There has consequently arisen, not a legal, but a 
practical immunity of the unions, as such, for the most wrongs 
committed. 

This practical immunity of the unions from legal liability is 
deemed by many labor leaders a great advantage. To me it ap- 
pears to be just the reverse. It tends to make officers and mem- 
bers reckless and lawless, and thereby to alienate public sym- 
pathy and bring failure upon their efforts. It creates on the 
part of the employers, also, a bitter antagonism, not so much 
on account of lawless acts as from a deeprooted sense of in- 
justice, arising from the feeling that while the employer is sub* 
ject to law, the union holds a position of legal irresponsibility. 

This practical immunity of the labor unions from suit or 
legal liability is probably largely responsible for the existence 
of the greatest grievances which labor unions consider they have 
suffered at the hands of the courts ; that is, the so-called "gov- 
ernment by injunction." It has come about in this way: An act 
believed to be illegal is committed during a strike. If that act 
is a crime., a man may be arrested, but in no case can he be con- 
victed of a crime except on proof beyond a reasonable doubt 
and a verdict of the jury, and on every jury there is apt to be 
some one favorable to the defendant. Many acts, however, may 
be illegal which are not criminal, and for these the only remedy 
at law is a civil action for damages ; but as the defendant is 
usually financially irresponsible, such action would afford no 
remedy. 

The courts, therefore, finding acts committed or threatened, 
cor which the guilty parties cannot be punished as for a crime, 
and cannot be made to pay damages by way of compensation, 
have been induced to apply freefy, perhaps too freely, the writ 
of injunction. They have granted, in many instances, this writ 
according to the practices of the court of equity upon prelimi- 
nary application, wholly ex parte, and upon affidavits, without 
any chance of cross-examination. If the courts had been deal- 
ing with a responsible union instead of with irresponsible de- 
fendants, they would, doubtless in many of the cases, have re- 
fused to interfere by injunction and have resolved any doubts 
in favor of the defendants instead of the plaintiffs. 

In another respect, also, this practical immunity of the unions 
has been very dearly bought: Nearly every large strike is at- 



266 SELECTED ARTICLES 

tended by acts of flagrant lawlessness. The employers, and a 
large part of the public, charge these acts to the unions. In 
very many instances the unions are entirely innocent. Hood- 
lums, or habitual criminals, have merely availed themselves of 
a convenient opportunity for breaking the law, in some instances 
even incited thereto by employers desiring to turn public opinion 
against the strikers. What an immense gain would come to the 
unions from a full and fair trial of such charges if the inno- 
cence of the unions were established, and perhaps even the guilt 
of an employer! And such a trial would almost necessarily be 
had before a jury, upon oral testimony, with full opportunity 
of cross-examination; whereas now, nearly every important 
adjudication involving the alleged action of unions is made 
upon application to a judge sitting alone; and upon written 
affidavits, without the opportunity of cross-examination. 

It has been objected by some of the labor leaders that in- 
corporation of the unions would expose to loss the funds which 
have been collected as insurance against sickness, accident and 
enforced idleness ; that these funds might be reached to satisfy 
claims made for wrongs alleged to have been committed by the 
union. I can conceive of no expenditure of money by a union 
which could bring so large a return as the payment of compen- 
sation for some wrong actually committed by it. Any such pay- 
ment would go far in curbing the ofhcers and members of the 
union from future transgression of the law, and it would, above 
all, establish the position of the union as a responsible agent in 
the community, ready to abide by the law. This would be of 
immense advantage to the union in all its operations. 

Again, it has been urged that the incorporation of the union 
would lead to a multiplication of lawsuits, which would involve 
the union in great expense; but the expense of conducting such 
litigation would be insignificant as compared with the benefits 
which would result to the union from holding a recognized and 
responsible position in the community. 

Again, it has been urged that the unions would not fear liti- 
gation if justice were promptly administered; but that it was the 
dragging out of litigation which was to be apprehended. I take 
it that, so far as the unions have suffered from the administra- 
tion of the law, it has not been from delays but from pre- 
cipitancy. They have suffered at times in the granting of pre- 
liminary injunctions, injunctions which have been more readily 
granted because of the irresponsible position of the defendants. 



PROBLEMS OF LABOR 267 

Again, it has been urged that the unions might be willing to 
submit themselves readily to suit if the rules of law, as now ad- 
ministered by the courts, were not unjust to labor. I am in- 
clined to think that there have been rendered in this country 
many decisions which do unduly restrict the activity of the 
unions. But the way to correct the evil of an unjust decision is 
not to evade the law but to amend it. The unions should take 
the position squarely that they are amendable to law, prepared 
to take the consequences if they transgress, and thus show that 
they are in full sympathy with the spirit of our people, whose 
political S3'stem rests upon the proposition that this is a govern- 
ment of law, and not of men. 



LABOR DISPUTES AND ADJUSTMENT 

THE CAUSE OF STRIKES 1 

There are few signs in the world at present of the coming 
of that "brotherhood of the classes" which some prophets fore- 
told as the result of the war for democracy. From almost every 
country comes news of labour unrest on a large scale, and from 
most countries of serious strikes often developing into civil dis- 
turbances. It is, of course, easy to exaggerate the significance 
of such movements, whose precise importance the continued 
activity of the various censorships makes it very difficult to 
ascertain. But enough reliable information comes through to 
make it certain that revolution is at least a possibility in certain 
of the most important Allied countries. 

The plain fact is that all over Europe, and to an increasing 
extent in America also, the armies are mobilising for something 
like a class war. Economic movements have a rapidly growing 
tendenc}' to become political, not only because the workers 
possess a greatly increased power and are far more conscious of 
it, but also because their economic claims are animated by a 
steadily deepening hostility to the whole capitalist order of 
society. Not only do the workers feel stronger, they have also 
a growing feeling that capitalism is insecure. The greatest 
barrier to labour unrest before the war was the widespread con- 
viction that capitalism was inevitable — that it had been in pos- 
session ever since the workers could remember, and that there 
were no signs that it was likely to come to an end. To-day 
the world, and the workers perhaps most of all, has lost the 
feeling of certainty about anvthing. We have come through . 
such changes already that no change for better or worse now 
seems altogether impossible. Empires, apparently strong and 
impregnable, have perished almost in a night; new nations have 
arisen; two great countries are actually governed by extreme 
Socialists, and several others by Socialists of a milder type. 
After the fall of the Habsburgs, the Hohenzollerns and the 
Romanoffs, after the coming of Soviet Russia and of Soviet 

1 From the New Statesman. 13:252-3. June 14, 1919. 



270 SELECTED ARTICLES 

Hungary, who, whatever his attitude towards these things, will 
dare to affirm that revolutionary social changes are impossible 
in his own country? Who will hold an untarnished faith in the 
permanence and inviolability of the old order? 

The fundamental causes of the world-wide unrest are mainly 
economic. Some peculiarly bad clause in the Peace Treaty, some 
blunder of the politicians, some manifestation of militarist re- 
action, may prove to be the spark which will set the world 
ablaze. But the fundamental cause of the conflagration will lie 
deep down in the economic system. The workers of France or 
Italy or Great Britain will rise in revolt not really because in- 
justice is being done to the workers of Germany or Hungary 
or Russia, but because in every country it is becoming increas- 
ingly difficult, as the Coal Commission has abundantly shown, 
for the workers to live any longer under an economic system 
devoted primarily to the making of profit. This is not to say 
that a majority, or anything like a majority, is consciously de- 
manding the overthrow of the capitalist system. Socialism of 
any constructive sort remains, probably in every country, the 
creed of a minority. But even the majority which has not 
attempted to formulate a constructive opinion has changed. 
The pre-war industrial system rested upon the general acquies- 
cence of the workers in the subordination of their personality 
to the needs of industry as interpreted by capitalists and em- 
ployers. It was possible only because it was able to treat La- 
bour as a thing instead of a number of persons, and because 
Labour, though it kicked occasionally, as a rule acquiesced in 
that treatment. To-day, nearly everyone has a higher conceit 
of himself than he had before. Nearly everyone makes not 
only higher material claims, which are hard enough for capital- 
ism to satisfy, but also higher human claims, which it has no 
means at all of satisfying, and which most of its protagonists 
do not even attempt to understand. We are face to face with 
the fact that the war has taught the workers in almost every 
country to assert their human claims by putting forth the vast 
economic strength which hitherto the}' have not known how to 
use. 

To-day, men are refusing any longer to believe that they 
were made for industry, and are asserting vehemently that in- 
dustry was made for all men, and must adjust itself to, and 
comply with, human needs. That is the real meaning of the 
world-wide unrest, the real moral of the repeated strikes, from 
whatever immediate causes they may spring. 



PROBLEMS OF LABOR 271 

The question, then, for statesmen in all countries is whether 
the economic and social system can transform itself so as to 
comply with the new human standards of value by which it is 
being judged. If it cannot, it will go to pieces, not perhaps this 
year, but next year or the year after, or at least within the next 
decade. Many people see that this is true of a large part of 
Europe, and yet believe that this country is somehow mysteri- 
ously immune from the coming epidemic of social and industrial 
revolution. There could be no greater mistake. What is true 
of Europe is true of us; and it is certain that we must either 
undertake the complete overhauling of our industrial system or 
else plunge slowly after our neighbors into a chaos out of 
which a better order may arise, but which will certainly first 
cause untold suffering in every class. 

"It may be we shall rise the last as Frenchmen rose the first, 

Our wrath come after Russia's wrath, and our wrath be the worst." 

If we are to escape such an ending to our knight-errantry 
on behalf of world democracy, we shall do well to set our house 
in order. But w 7 here and how are we to make a beginning? 
The system of private profit has us, like our neighbour na- 
tions, in its toils. Our Ministers of State are still declaring 
that they desire to see high profits, because high profits are es- 
sential to the rapid and successful development of industry. 
Our employers have still no suggestion for a remedy for social 
ills beyond a reiteration of the demand for increased produc- 
tion. Yet surely it is obvious to anyone who looks with half 
an eye at the industrial situation that the problem of production 
is only part of a general psychological problem, and that there 
can be no solution of it, and no creation of industrial efficiency, 
unless the idea of production is related to the idea of service. 
If we want efficiency, we must persuade the workers that it is 
worth while, and their bounden duty, to do their best; but this 
we cannot do while we still ask them to work under a system 
which 3 from any moral standpoint, is utterly indefensible. The 
only appeal which can restore the world to good order is a moral 
appeal ; and such an appeal, under present conditions, we simply 
have not the right to make. It is true that our position is in 
this respect certainly no worse than that of other nations ; but 
it is a scant consolation if we must all perish together for our 
sins. 

There is no need to take a sensational view in order to em- 
phasise the gravity of the strikes which are now epidemic in 



272 SELECTED ARTICLES 

every industrial country. It is out of economic movements that, 
under present conditions, political movements are almost bound 
to proceed; and, even if the present troubles blow over, we can 
be sure that others will follow unless the root evils which create 
them are removed. 



THE AUSTRALIAN SYSTEM OF DEALING 
WITH LABOR DISPUTES 1 

The Australian system of dealing with labor disputes and of 
the regulation of labor conditions has passed through many 
changes. Different states, each with full power of self-govern- 
ment, have from time to time altered and amended their laws 
according to experience. In New Zealand, for instance, the 
Industry Disputes Act has been amended in some way on an 
average of once every two years since the year 1900. In New 
South Wales, existing legislation has on three occasions been 
practically repealed, and entirely new laws have been passed. 
But in all the states there is a striking uniformity of essentials. 
The whole industrial system is based on the principle that the 
relationship of employer and employe is a matter of grave social 
concern that justifies interference by some centralized authori- 
ties. In other words, freedom of contract is not now unlimited 
but can only operate within certain areas prescribed by law. The 
desire of parliaments has always been to make this interference 
between employer and workman as small as possible, and the 
result has been that practically all industries work today only 
above minima which are from time to time prescribed, and dur- 
ing certain hours that are fixed by law. 

To understand the Australian system it is necessary to real- 
ize that the country generally has accepted three definite in- 
dustrial claims as now beyond dispute. We start off in the 
new era of reconstruction w T ith concessions finally guaranteed 
that are the subject of controversy in other countries. These 
three fundamentals, as I might call them, are as follows : 

1. The recognition of the fullest right of workmen to organize for 
their own protection, and the right of each union to make the collective 
bargain for the industry that it represents. 

2. The recognition of the eight-hour day. 

3. The recognition of the principle of the living wage in all industries 
— that is, the drawing of a line below which competition in the labor 
market is illegal, but above which ordinary economic forces come into play, 

1 By George Beeby, Minister of Labor, New South Wales. Survey. 
42:399-401. June 7, 1919. 



PROBLEMS OF LABOR 273 

These three concessions have been the result of our system of 
industrial arbitration. This system has been arrived at by two 
different methods which have gradually converged. Two states 
adopted what is known as the wages board system, all the 
others, what can more accurately be described as judicial arbi- 
tration. 

The wages board system contained the minimum element of 
compulsion. Under it the government of the day had power, 
within certain limits, to appoint a wages board for an indus- 
try. This board generally consisted of about six workmen and 
six employers who selected their own chairman, with provision 
that the government could provide a chairman in the event of 
failure of mutual selection. These boards were authorized to 
declare a minimum standard for the industry on hours, mini- 
mum w r ages and the conditions attached to juvenile labor. They 
originally applied only to certain industries in which women and 
children were largely employed, such as garment making, manu- 
facture of confectionery and similar occupations ; but they were 
gradually extended, and in the states which had adopted this 
system all manufacturing industries gradually came under regu- 
lation. The finding of the board became a common rule for the 
industry, and an} r employer working below the standard fixed 
was liable to cash penalties. That system, however, did not in 
any way interfere with the rights of the workmen to take part 
in a strike or in any other legal way to force a better bargain 
for his trade. 

One of these states which originally adopted wages boards 
abandoned the scheme and now works under the system of 
judicial arbitration. The wages board system today operates 
only in one state, Victoria, and its awards generally conform 
to the standards fixed by the arbitration courts. The judicial 
system was adopted originally in New Zealand and ultimately, 
with variations, by the states of New South Wales, South 
Australia, Queensland and Western Australia. It leads to the 
ultimate settlement of all industrial disputes by a court especially 
appointed, generally consisting of a single judge. In some cases 
the judge sits with assessors representing the two interests, but 
in nine cases out of ten the ultimate decision rests with the 
judge. These judges operating in these states and in the federal 
area conduct proceedings much on the same lines as those of a 
civil court. The parties become litigants, they file claims and 
replies, issues are joined, advocates are engaged, and elaborate 



274 SELECTED ARTICLES 

inquiries in open court are held, evidence being called in sup- 
port of cases, in the reply, in rejoinder, in rebuttal; and in every 
way the paraphernalia of a court is maintained. Ultimately the 
decision is left to the judge whose award, when made, becomes 
the standard for the industry. 

Today there is a strong movement for a complete change 
of this system. It is frankly admitted by both sides that its 
effect has been to keep workmen and employers apart, that a 
vast amount of work done by the courts could be done by 
voluntary conciliation and equally satisfactory results reached. 
The movement in Australia today is towards investigation of 
industrial troubles by negotiation rather than by litigation. 

New Zealand has already altered its law and makes it difficult 
for the arbitration court to deal with the case. Before it can 
get to the court it must be dealt with by a special body appointed 
for a district or appointed for each individual dispute. In every 
way the parties are urged and encouraged to arrive at their 
own agreements, but in the background the court exists to deal 
with the cases of violent controversy, particularly in industries 
of a national character. 

In New South Wales a recent law provides for the appoint- 
ment of a board of trade. This board of trade consisting of 
representatives of employers and workmen in equal numbers, 
with a judge of the industrial court acting as president, is en- 
trusted with the following, among its other duties : 

i. The fixing from year to year of the basic living wage applicable 
to all adult male and female labor. (This function does not in any way 
prevent arbitration courts from fixing minima for particular industries. It 
only restricts them from going below the basic living wage.) 

2. The appointment of industrial councils for # industries. 

3. The appointment of shop committees for individual workshops. 

4. The general encouragement of a system of industrial organization 
on the lines of the Whitley scheme. 

5. The holding of inquiries on important industrial matters of uni- 
versal interest and the recommendation to Parliament from time to time 
of legislation. 

6. The absolute control of the conditions under which juvenile labor 
can be employed. 

The idea of this act is gradually to transfer the whole system 
of industrial regulation from judges and industrial courts to 
these industrial councils and shop committees. 

Power is also given to the government to utilize the indus- 
trial councils in any future provision which may be made for 
unemployment insurance. There is strong opposition to main- 
tenance of any highly centralized fund dealing with insurance 
against employment and equalization of wage pay. It is thought 



PROBLEMS OF LABOR 275 

that the great problem will be more effectively dealt with if 
power is given to the government to subsidize any fund which 
may be raised in any industrial council for the purpose of unem- 
ployment insurance. 

It must be remembered that a real effort is being made 
throughout the commonwealth today to move by stages from 
the old system of industrial arbitration to a system based some- 
what on the Whitley scheme. The legislation is so framed as 
to give the minister of the day ample power to encourage in 
every way this program of bringing employers and workmen 
into close touch ; but the idea of maintaining some tribunal 
which in the end can fix minimum standards for an industry in 
the event of the failure of negotiation, is maintained. With 
all its faults, the general opinion among employers is that in 
these days of perpetual industrial unrest it is essential to have 
some tribunal before which parties in violent dispute can be 
called, and to force them to adjust their differences. Work- 
men today are not favorable to compulsory arbitration. They 
believe that they could have achieved bigger results by the free 
use of the strike weapon and claim that restrictions on the right 
to strike have held them back. There is some basis for this 
objection from their point of view. Arbitration has largely im- 
proved the standards of unskilled labor and of those classes of 
workmen who in the past have found it difficult to organize. 
The lower grades of labor clearly have received very definite 
benefits from the system, but the skilled mechanic, with the 
perpetual restriction placed on his right to strike, has not im- 
proved his standards in the same proportion. That is to say, 
the relative difference between skilled and unskilled labor is not 
as great today as it was before the systems were adopted. 

These limitations on the power to strike have not in any 
way saved us from serious dislocations. Workmen strike freely 
in Australia, in spite of the law, and no law can check them. 
But constant public investigation of industrial disputes has had 
a very restrictive effect. It has prevented and has shortened 
many strikes. All proceedings in the past have been in open 
court, and the public has become rather intimately acquainted 
with the nature of industrial relations. Workmen, except those 
who are revolutionary in tendency, are often engaged in analyz- 
ing the important question whether an industry can stand some 
increase which is proposed and, generally, the whole system has 
been of great educational value. Its main weakness, however. 



276 SELECTED ARTICLES 

has been that it has prevented negotiation and has kept employ- 
ers and workmen in two definite, hostile camps, always ready to 
litigate but rarely in the mood for conciliation. 

It must be remembered that the national • parliament, Con- 
gress as you call it, has some power over industrial matters. 
The federal constitution provides that parliament can legislate 
for the prevention and settlement of industrial disputes extend- 
ing beyond the limits of any one state. In pursuance of this 
power, the federal court of arbitration has been set up, and 
any dispute which gets beyond the boundary of one state can 
be, and often is, determined by this federal court. The court, 
however, is constituted very much on the same" lines as those 
of different states and generally adopts the same principles in 
many awards. The tendency is for unions, if possible, 'to make 
their disputes go beyond the state boundary. They prefer the 
federal tribunal to that of the states. But in this court the 
learned judge who is today its president has not gone to any 
material extent above the standards generally recognized by 
these state tribunals. He has laid down one general guiding 
principle, and the duty of his court is not to regulate the de- 
tailed workings of an industry but merely to provide for the 
fixing of a reasonable standard of living in the industry, leaving 
the complete management of the business in the hands of the 
employer and his representatives. 

There has been much comment by employers from time to 
time on different awards. There has been considerable oppo- 
sition to the whole system, but this has gradually disappeared. 
Very few employers today ask for a complete repeal of our 
industrial legislation. They welcome public investigation of 
claims made, and they agree that in a young country which is 
building up its manufacturing industries it is better that all em- 
ployers should be put upon the same footing. No employer 
in Australia can now obtain an advantage by the use of cheap 
labor. It is true also, as the employers state, that the fixing of 
the minimum wage for the industry has tended to inefficiency, 
but employers are not without blame in this, when wages fixed 
have been only minima. Most employers at the outset, directly 
a wage was fixed, petulantly announced that all their employes 
in the future would get the same wage and abolished the varia- 
tions which previously existed. The result of this general appli- 
cation of the minimum as a standard wage undoubtedly led ex- 
pert workmen to come down to somewhere near the level of 



PROBLEMS OF LABOR 277 

the average man. During recent years, however, many employ- 
ers have accepted the awards of the court only as minima and 
have higher wages in order to get higher results. 

There is also a very strong movement today to try to intro- 
duce systems of payment on piece-work and payment by re- 
sults, but this is bitterly resisted by unionism. It is thought 
that the . industrial councils will probably be able to bring about 
some change in this direction. In the shipbuilding industry, 
recently commenced, the New South Wales government has 
succeeded in getting mechanics, particularly those engaged in 
riveting, to work on a piece-work basis, with proper guarantees 
that increased output will not lead to reduction of piece-work 
rates, and also with the provision that workmen shall not injure 
themselves by going beyond the ordinary eight-hour day's work, 
except in cases of emergency. The result of this change was 
that the output of riveters per man was on an average doubled 
within a few weeks, and it is anticipated that even better results 
can be obtained without injury to the workmen. 

I discussed the whole of this question with the associated 
chambers of manufacturers of Australia some weeks ago, and 
the gathering unanimously agreed to the following propositions : 

1. That a minimum standard of comfort prescribed by law was not 
injurious to them, so long as the detailed management of the business 
was left entirely to their own judgment. 

2. That the eight-hour law, particularly in all industries in which 
men worked under cover, or in connection with machinery, should be uni- 
versally established. 

3. That the time had arrived for a joint responsibility of the govern- 
ment, the employer, and the workman, to provide effective means of in- 
surance against unemployment, sickness and accident. 

4. That as a last resort it was best, in the interests of the state, to 
maintain some authoritative system of settlement of industrial disputes in 
all important industries. 

5. That standardized conditions for the whole commonwealth, as to 
the conditions of employment of juvenile labor, were advisable. 

I venture to summarize the situation as follows : Australia 
will continue to maintain the three fundamentals mentioned in 
the beginning of this statement. 

It will continue to maintain some tribunals which will have 
power as a court of ultimate resort to make an award in settle- 
ment of industrial disputes which will be binding on the parties. 
But these tribunals will probably consist more of industrial 
councils, and access to them will be more difficult. There will 
also be created industrial councils for industries and shop com- 
mittees for individual establishments. And all parties will be 
compelled to negotiate in these councils on all matters affecting 
industries before they will get access to a compulsory tribunal. 



278 SELECTED ARTICLES 

A definite movement will before long be made in the direc- 
tion of unemployment insurance, but will, I think, be on the 
lines already indicated; that is, the industrial council will be- 
come responsible for the creation and maintenance of the fund 
for its particular industry — this fund being liberally subsidized 
from the public purse. Industrial records of individual work- 
men will be kept, and gradually those who are unworthy will be 
scheduled and not allowed to participate in any insurance fund. 

The general control of the whole scheme of industrial regu- 
lation will, I think, beyond doubt before very long be centralized 
in the national government. There is a strong movement today 
which is rapidly reaching a climax to vest this important func- 
tion in a national authorit}' on the understanding that it uses 
the state machinery now in existence. Some uniformity is es- 
sential. There is considerable conflict today between different 
state systems and the federal system, and both employers and 
workmen are in agreement that it would be better to take the 
industrial power from the hands of state parliaments and invest 
it in Congress. 



THE DEVELOPMENT OF GOVERNMENT IN 
INDUSTRY x 

During the past five years, in several branches of the gar- 
ment-making industries of New York and Chicago, certain prin- 
ciples for the adjustment of conflicting interests with employees 
by legal methods have been experimented with. This experience 
has suggested certain ideas and possibilities interesting to those 
who appreciate the growing danger of leaving the settlement 
of employer-employee controversies to the arbitrament of in- 
dustrial warfare and who understand how, in other human re- 
lations, the crude method of force has been superseded by the 
legal method. 

The protocol 2 in the cloak and suit trade, together with half 
a dozen similar protocols in other branches of garment-making 
in New York, the Rockefeller system of industrial representa- 

1 By Earl Dean Howard. Director of Labor for Hart, Schaffner & 
Marx, Professor of Economics in the College of Liberal Arts and Pro- 
fessor of Banking and Finance in the School of Commerce, Northwestern 
University. From the Illinois Law Review for March, 191 6. 

2 . See Bulletin of U. S. Bureau of Labor Statistics No. 144, March 
19 14, entitled, "Industrial Court of the Cloak, Suit and Skirt Industry of 
New York City," by Charles H. Winslow. 



PROBLEMS OF LABOR 279 

tion in the Colorado mines, and the labor agreement of Hart 
Schaffner & Marx 3 in Chicago, grew out of long and bitter 
strikes, severe enough on both sides to convince the parties 
thereto that the old system was intolerable. Complete domina- 
tion by either side was impossible and intermittent struggles 
over the division of power were costly and unsatisfactory. The 
protocols and agreements provided a system of government to 
protect each side against the other. • 

Any system of government for the adjustment of human re- 
lations and conflicting interests by law rather than by force re- 
quires some devices to perform legislative, executive and ju- 
dicial functions. Rules must be laid down and interpreted, ad- 
ministrative duties must be discharged, effective limitations and 
requirements must be placed upon individuals to secure co- 
ordination, and all questions in dispute must be authoritatively 
decided. 

There is a strong tendency to enlarge the scope of political 
government so as to include also industrial government. 
Whether this shall grow into state socialism or whether private 
enterprises will be able individually or collectively to establish 
a satisfactory form of government, supplementary to political 
government, is one of these large interesting questions which 
may be decided within a generation or two. The solution may 
depend upon the ability of the employees to develop a construc- 
tive power and effective government among themselves. 

Employers and those responsible for the prosperity of large 
enterprises are reluctant to lose any part of their control. When 
they discover that the power has passed from them, or when 
their government has failed to maintain place, they are then 
ready for experiment. The protocols and other experiments 
have always grown out of strikes, usually long and exhausting. 

Structure of Government. — The first step is an agreement on 
constitution providing usually for a board of arbitration. 
Executive control is left in the hands of the employer but sub- 
ject to the limitations of the agreement and the decrees of the 
board. The representatives of the employees, usually labor union 
officials, strive through the board to extend these limitations to 
inhibit all acts of the employer which the employees or their 
officials conceive to be of any disadvantage to themselves. The 
system resembles a constitutional monarchy. 

3 See Monthly Bulletin of the Pennsylvania Department of Labor and 
Industry, August 1915. "The Experience of Hart, Schaffner & Marx with 
Collective Bargaining." 



28o SELECTED ARTICLES 

The legislative function is usually inadequately provided for. 
New conditions arise to which the rules of the agreement and 
previous decisions are not applicable. The employer claims the 
right to legislate by administrative decree on the ground that 
he has all the authority not specifically relinquished in the agree- 
ment. The union officials urge the board to assume jurisdiction 
and by a decision create a precedent which has the effect of lav 7 . 
In practice legislation originates in several ways : (i) The con- 
stitution or basic agreement entered into by the parties at inter- 
vals for definite terms and with which the decisions of the board 
of arbitration must harmonize; (2) administrative orders 
promulgated by the employer and subject to veto or alteration 
by the board of arbitration on the ground of unconstitutionality; 
(3) judicial decisions having the force of precedents by the 
board of arbitration in adjudicating complaints — "judge-made" 
law. 

The judicial function is performed by the board of arbitra- 
tion and inferior courts or committees, such as the Trade Board 
in the Hart Schaffner & Marx system, and the Committee on 
Immediate Action in the Suit and Cloak Protocol. Appeals may 
always be taken for final decision to the board of arbitration. 
Decisions are based upon the fundamental agreement, adminis- 
trative orders which have not been challenged, precedent de- 
cisions, customs and practices in the industry. 

The judicial boards and committees are composed of repre- 
sentatives in equal strength of employers and employees, pre- 
sided over by a neutral arbitrator who casts the decisive vote. 
This neutral arbitrator has the opportunity to develop an extra- 
legal process of mediation by which the necessity of much liti- 
gation is avoided. It is usually stipulated that agreements 
reached by mediation do not create precedents, but apply only 
to particular cases in hand. The neutral arbitrator, if he have 
the ability and inclination, may in the course of his work by 
discussion and education establish standards of justice and fair 
dealing in the employer-employee relation acceptable to both 
sides. These may form a sort of unwritten constitution of great 
practical influence upon the harmonious operation of the enter- 
prise. The possibility of disputes and conflicts is greatly re- 
duced when the parties, acting in good faith, gradually ap- 
proach agreement in their beliefs as to what is right and wrong 
action. 



PROBLEMS OF LABOR 281 

Industrial concerns which have adopted some form of indus- 
trial government such as here described find it advantageous to 
establish a department, to supervise their relations with their 
employees and to represent them in litigation and negotiation. 
Positions are thus created for men who have been trained in 
economics, political science, law and business, and who have 
talent for negotiating, pleading, instructing and social service 
work. 

In the five-year experience with the Hart Schaffner & Marx 
arrangement, most of the fundamental issues which arise in the 
employer-employee relation have been met and adjudicated. 
These typical cases have revealed principles which may some 
day help to form an established code of governing rules for in- 
dustry and supplanting the present method of competitive bar- 
gaining and conflicts settled by economic strength. 

Opportunity to Work. — The ordinary concept of the em- 
ployer is that labor is a commodity purchasable as other commod- 
ities. He strives to get as much as he can as cheaply as pos- 
sible. The job or opportunity to work is his private property 
and the workman has no claim upon it. The new principle gives 
the worker a right to his job which can be defeated only by his 
own misconduct. The job is the source of livelihood to the 
worker exactly as his capital is the source of livelihood to the 
capitalist. In the slack season whatever work there is shall be 
divided equally among all as far as practicable. 

In case of discharge, the burden of proof is upon the em- 
ployer to show that such discharge is necessary for the welfare 
of the organization. He must also show that any alternative 
action involving less hardship on the individual is inadequate. 

So long as there is an adequate supply of labor available in 
the skilled trades, the employer must not introduce an unreason- 
able number of apprentices into the trade. 

In the hiring of new help, preference must be given to mem- 
bers of the union which is a party to the agreement, provided 
such members are competent and of good records. To main- 
tain its prestige with the people, the union must be able to keep 
all its reputable members at work. 

Discipline. — Disciplinary penalties must never be allowed as 
a means of discouraging the organization of employes into 
unions. The employees must have leaders, and some of these, 
lacking experience and information, sometimes fail to distin- 



282 SELECTED ARTICLES 

guish between legitimate complaining and insubordination. 4 
Discrimination on account of union activity is difficult to prove 
or disprove and is a favorite device for befogging a case. The 
difficulty is diminished by specializing the disciplinary function 
in one man who is free from suspicion of antagonism to the 
organization of employees. 

Managers who are directly responsible for the efficiency of 
the shop should not be burdened with the responsibilities of 
discipline. This function is one of great delicacy. If badly or 
unskillfully performed it is a fruitful source of antagonisms 
and personal feelings which is like sand in a complicated ma- 
chine. If, however, it is handled with judgment and resource- 
fulness by an official who is detached from an immediate interest 
in the operations and who can look forward to ultimate results, 
the function presents great opportunities for gaining the respect 
and good will of the employees. Discipline cases afford the 
finest opportunities for educational work, both with worker and 
foreman. 

So long as the offending employee is to be retained in the 
factory, any disciplinary penalty must be corrective and no more 
severe than is necessary to accomplish the best results for all 
concerned. Most offenders are victims of wrong ideals or 
mental deficiencies, the remedy for which is not punishment but 
help and instruction. Delinquencies in management can fre- 
quently be discovered and the manager or other executive may 
need the services of the expert discipline officer quite as much 
as the original offender. The efficiency of the discipline officer 
should be measured by the proportion of ex-offenders who have 
ultimately become competent and loyal friends of the company. 
It is his prime duty to prevent and remove from the minds of 
the people all sense of injustice in their relations with the em- 
ployer, which is the fundamental cause of the bitterest indus- 
trial conflicts. 

Management. — The great defect in autocratic government is 
the lack of adequate and intelligent criticism. Autocratically- 
governed business enterprises suffer from the absence of their 
wholesome check. Organized employees represented by spokes- 
men who are protected in that function, together with a labor 

4 Under the protocol, piece-work prices are determined by bargaining 
between the individual employee and a shop-committee. A serious situation 
is created by the suspicion of the workers that the power of discipline is 
used to gain advantage in bargaining. There is no centralization and 
specialization of the discipline function there. 



PROBLEMS OF LABOR 283 

department responsible for the good-will and welfare of the 
employees, constitute a critical check on bad management and 
the source of valuable suggestion for more efficient manage- 
ment. Piece-workers, especially, are vitally affected in their 
earnings by the quality and efficiency of the management. 
Subordinate executives in the factory may conceal this ineffi- 
ciency from their superior officers for a long time, but a system 
of free complaints makes this impossible. 

Standards. — Lack of standards is probably the chief cause of 
disorder and conflicts, especially in the needle industries. This 
includes standards of workmanship, piece-work prices, conduct 
in the shop, and all points which involve the interest of the 
employee. 

The primary tribunals or Trade Board should settle finally 
all disputes as to facts; appeals should be taken only when dis- 
puted standards are involved. Each case before the Board of 
Arbitration is an opportunity to establish one or more stand- 
ards. Thus, unless the industry is one of great changes, the 
board will find the need for its services grow gradually less as 
both parties learn to be governed by standards. The immense 
value to an industry of established standards should reconcile 
the parties to the time consumed in deciding some comparatively 
unimportant case which happens to afford opportunity for cre- 
ating a standard. The board in such cases should get expert 
and technical testimony from all sources through witnesses and 
committees of investigation, so that the work is done once for 
all. 

Unionism. — This system of government assumes adequate 
representation of the employee; such representation requires 
organization and leadership. There are many advantages where 
the employer is large enough to be independent of associations 
of employers, and where the employees' organization is limited 
to employees of the one company. At the outset, the working- 
men are likely to belong to national unions, and the company 
to be a member of a trade association, especially if the experi- 
ment begins at the close of an industrial conflict or general 
strike. 

Many of the traditional principles and practices of unionism 
are developed out of a state of militancy and are not adapted 
to a state of peaceful government, hence they are obstructive. 
Unless the employees as well as the employer agree that the 
rules and decrees of the Board of Arbitration shall prevail over 



284 SELECTED ARTICLES 

any rules or orders of either a national union or a trade asso- 
ciation; that the government which they are establishing shall 
receive their undivided, unhyphenated allegiance; the scheme 
will be unsound. 

These difficulties do not exist when the Board of Arbitration 
has jurisdiction coextensive with the association and union and 
where the entire membership of both groups submit themselves 
to its government. The combination of local unions into great 
national and international federations was a war measure and 
loses its raison d'etre when a system of representative govern- 
ment is established. 

When the organization of employees uses its strength to pro- 
mote the reign of law and order, the employer has an interest 
in helping to develop its strength. So long as he has faith in 
this system, he cannot then be hostile to the organization. 

The "closed shop" issue which is responsible for so much 
industrial warfare has been eliminated in some of the needle 
industries by the device of the "preferential shop." The issue 
has its cause in the difficulty of the unions in maintaining their 
membership and collecting money from members. The unions 
use their power over the employer to force him to maintain the 
strength of their organization by penalizing persons who are 
disinclined to submit to the rule of the union officials. The con- 
scientious employer has moral scruples against forcing his em- 
ployees to be members of a union against their will and to sub- 
mit to the authority of union officials. 

The preferential shop idea is a compromise by which the 
greatest dangers and injustices of compulsory union member- 
ship are avoided and yet by which there is a distinct advantage 
to members of the union Union members have preference 
when new people are needed and, when the force must be re- 
duced, they are retained in preference to others. 

Under this system the danger of the abuse of arbitrary 
powers by union officials as well as by employers is much re- 
duced. Both must submit in equal degree to the board of arbi- 
tration, and all their actions may be reviewed by that body. The 
principles of right action as laid down by the board governs 
them equally. 

Wages. — We are so habituated to the idea of labor as a pur- 
chased commodity or service, that it seems to us quite natural 
for the price of it to be determined by the law of supply and 
demand through the bargaining process. When employees are 
unorganized, they are unable to bargain with a large employer 



PROBLEMS OF LABOR 285 

on anything like equal terms ; when they are organized, the 
bargaining may take the form of industrial warfare. Bargain- 
ing cannot be equitable and fair unless either party has the 
right to withhold what is offering to the other. This principle 
is so true that the courts and legislatures have been forced to 
legalize strikes and picketing, notwithstanding the tendency of 
these measures to subvert law and order and to jeopardize the 
right of person and property. 

The dilemma is most acute in public utilities where the 
public interest is peculiarly affected; therefore, every possible 
means is being tried to introduce government in the form of 
voluntary arbitration. Upon the success of this method may 
depend the future necessity of using the authority of the state 
to establish and enforce standards by compulsion in at least 
some instances. 

Whether voluntary government can succeed or not will turn 
largely upon the possibility of discovering principles of manifest 
justice from which practicable standards may be deduced. The 
great need is therefore a principle applicable to wage controver- 
sies. Much depends upon a satisfactory answer to the sphinx- 
riddle, what is a just wage? 

In the system here described, the rate of wages and piece- 
work prices existing at the beginning of the agreement was ac- 
cepted as the basis. Certain horizontal advances were granted 
to prevail during the term of the agreement. At the end of 
that period, the whole question is reopened. If both parties 
agree to arbitrate this major question as they do all others, 
the burden is thrown upon the Board of Arbitration of finding 
some governing principle from which a rational decision may be 
derived. 

The student of political science will find in the development 
of voluntary industrial government an interesting contribution 
to his science. Just as the common law of England evolved 
from self-imposed customs and regulations in the interest of 
harmonious dealing and relations, so here we may observe an 
organic growth of industrial government, establishing itself 
alongside the federal and state jurisdictions. Perhaps this will 
be the means of escape from the dilemma of domination by a 
ruling over a subject class on the one hand, and, on the other, 
a chronic state of civil warfare with the classes perpetually 
struggling for advantage, with small consideration for the pub- 
lic welfare. 



286 SELECTED ARTICLES 

THE QUESTION OF TRADE JURISDICTION 1 

Those who oppose trade-unionism and advocate some other 
form of organization delight in calling attention to the jurisdic- 
tional disputes which exist within the trade-union movement. 
One of the arguments advanced in favor of the industrial form 
of organization is that it would eliminate jurisdictional disputes 
and therefore place the workers in a much stronger position. 

Our opponents — those who advocate an industrial form of 
organization, or "One Big Union," delight in making the state- 
ment that trade-unionism has shown itself incompetent because 
the American Federation of Labor has failed to adjust all in- 
dustrial disputes when they arise. 

What are some of the facts in the case? 

Unquestionably jurisdictional disputes have created divisions 
of opinion between trade-unionists when they should have acted 
collectively. But jurisdictional disputes arise principally because 
of changes continually taking place in industry. 

How Disputes Originate 

A few years ago no one could imagine a question of juris- 
diction arising between the locomotive engineers and the street 
car drivers, but electricity took the horse's place, the driver be- 
came a motorman, and from street car lines the interurban 
lines developed, some of these interurban lines attaching two or 
three passenger cars to the one containing the motor. In some 
cases locomotive engineers operated these suburban trains, in 
others members of the Street Car Men's Union did likewise, 
and so, as a result of a rapid change in method of transporta- 
tion, a question arose which has not yet been finally settled, but 
which is gradually reaching the point of solution because the 
methods for adjusting such disputes which are provided by the 
American Federation of Labor are being applied. 

It requires no elaborate investigation of the facts to dis- 
cover that the industrial form of organization, or "One Big 
Union," would equally fail to solve questions of jurisdiction, 
unless everyone in industry was placed upon the same dead level, 
which is something which nature itself would not allow to exist, 
for nature is continually making changes, continually modifying 
conditions, continually establishing new forms. 

1 By John P. Frey, Amalgamated Journal of Iron and Steel Workers. 
December, 19 19. This article represents the point of view of organized 
labor.— Ed. 



PROBLEMS OF LABOR 287 

Someone has advocated that the electrical trades should form 
an industrial union. This would mean, among other things, 
that the pattern makers, machinists, molders, blacksmiths, 
polishers, armature winders and other workmen on electrical 
machinery would all be the members of an industrial electrical 
workers' union. In addition to this it would be necessary that 
all of the linemen, and all of the men wiring buildings, should 
also be members of this one organization. The electricians em- 
ployed in the erection of buildings might possibly raise a ques- 
tion of nothing compared to what would follow if the proposed 
scheme would go into effect and would include not only all of 
the telegraph operators, at which step the railroad brotherhoods 
would step in, but also the electricians employed in theaters. 
These would also be members of the electrical workers' union, 
for it was to be all-embracing so far as those connected with 
any form of the electrical industry were concerned. The very 
extension of this organization to stage employes would imme- 
diately lead to jurisdictional complications with stage employes 
and actors' unions. 

Delightful in Theory 

Many a theory is delightful to contemplate until we begin to 
put it into operation. 

It seems logical to those who advocate the industrial form 
of organization, so that jurisdictional disputes may be elimi- 
nated, that the transport workers should get members of but 
one organization. 

Those engaged in transportation are the seamen, the railroad 
operators, the men in the railroad shops, the longshoremen, and 
the teamsters. 

If such a form of organization could possibly be brought 
into existence how would it be possible for the teamster to have 
proper attention given to his particular necessities when they 
differ as widely as they must from those of the seamen? 

The whole structure of industrialism becomes ridiculous as 
soon as we begin to study what would follow the thorough- 
going application of this form of organization. 

There are those who imagine that jurisdictional problems 
are due to the form of organization which trade-unionism has 
developed. 

Nothing could be farther from the facts. As far back as we 
can find references to the problems which organized workers 
were dealing with, we find traces of jurisdictional disputes as 
bitter and more violent than those of today. 



288 SELECTED ARTICLES 

Four Centuries Back 

In the 15th and 16th century, shipbuilding was a prominent 
industry along the banks of the River Hull in England. The 
woodworkers of that period were all members of their respective 
guilds, three of which were in active existence at that time. 
The Shipwrights' Guild whose members built the house, and the 
Joiners' Guild, whose members worked on furniture, cabinet 
work, and other of the finer parts of wood-working. 

During the bitter cold months of winter the shipwrights 
could not work in the yards and they frequently endeavored to 
do some carpentry work. 

During the fall months the carpenters were frequently idle 
and endeavored to work in the shipyards ; and, at various time, 
the joiners endeavored to do some of the shipwrights' work in 
the interior of the ship after the hold had been completed and 
the decks boarded over. 

Their jurisdictional disputes led to violent encounters and 
the records of the River Hull Guilds are filled with interesting- 
examples of the methods adopted, the by-laws enacted and the 
instructions given to committees, all aiming to give that partic- 
ular guild advantage over the others in its jurisdictional dispute. 

There was no federation of guilds, enabling the quarreling 
factions to come under the influence of others whose only de- 
sire was to find a wise solution of the jurisdictional problem. 

One of the interesting examples of jurisdictional disputes 
among English workers arose from a quarrel between the Cord- 
wainers' Guild (shoemakers) and the Cobblers' Guild (shoe- 
menders) of London in the latter part of the 14th century. 

The Cordwainers' Guild claimed jurisdiction over the making 
and mending of all shoes. The municipal records of ancient 
London contain several references of the methods b}^ which 
this jurisdictional dispute was carried cn.it. 

Strong -Ann Methods 

Among other efforts to gain supremacy, the wardens of the 
Cordwainers' Guild, who evidently acted as strong-arm business 
agents, visited the cobblers' shops, beat up the cobblers, broke 
their stools and benches, destroyed their little stocks of leather 
and appropriated their tools. 

In the summer of 1395, while the King was making a formal 
entry into London, the officers of the Coblers' Guild presented 



PROBLEMS OF LABOR 289 

a petition to him, requesting that their rights be safeguarded 
and their jurisdiction denned. Of course the King would not 
personally give his attention to such a subject, but he instructed 
the Lord Mayor to adjust the jurisdictional dispute. The Lord 
Mayor ordered both of the guilds to send twelve of their mem- 
bers before him. He listened to what these twenty-four shoe- 
makers, and cobblers had to say and then he handed down the 
decision of a Solomon. 

He defined the lines of jurisdiction, giving the Cordwainers' 
Guild the making of all boots and shoes and the mending of 
shoes which the}- themselves had made. He also defined the 
kinds of leather which could be used exclusively by shoemakers. 
He gave the Cobblers' Guild complete jurisdiction over the 
mending of shoes brought, to them, and also denned the kind 
of leather which they might use, and went so far as to provide 
that they could not evade his decision and become shoemakers 
by accepting the latch-hole of a shoe and building a new shoe 
around it. 

Fortunately, the jurisdictional disputes between organized 
workers which arise in America are not settled by the civil au- 
thorities. As they arise they are adjusted by the American Fed- 
eration of Labor in its annual conventions. Some disputes have 
not been adjusted immediately ; it has required time to clear 
men's minds and to lead them to realize that the good judg- 
ment of the trade union movement as a whole was probably as 
sound as their own. 

Satisfactory Adjiistmen is 

But the serious jurisdictional disputes which have at times 
threatened harmony within the trade union movement have, 
with few exceptions, been adjusted to the satisfaction of all 
concerned. 

The effectiveness of the American trade union movement is 
not to be judged by the number of jurisdictional disputes which 
arise! rather it is to be judged by the number of these disputes 
which it has been able to adjust. 

As we indicated, jurisdictional disputes arise and must con- 
tinue to arise because of the wonderful changes which take 
place in our modern industry. The all-important thing is not 
the construction of an organization which the theorist believes 
would prevent jurisdictional disputes. To the practical-minded 
man of experience in the industrial world, the all-important 



2Q0 SELECTED ARTICLES 

question is the adoption of methods through which these dis- 
putes can be adjusted when they arise. 

The record of the American trade union movement indi- 
cates that it has proven more successful than any other move- 
ment in adjusting jurisdictional disputes when they arise. It 
has not followed the method which was carried out by the 
workers in the guilds of centuries ago. It has not depended 
upon the authorities acting as a judge, or upon the militant 
strength of members alone. It has been governed by common 
sense, guided by the knowledge that trade union experience in 
trade union methods is the surest, safest method for the solu- 
tion of jurisdictional, or any other questions which affect the 
workers. 



THE ATTITUDE OF THE COURTS TOWARDS 
INDUSTRIAL PROBLEMS 1 

Modern industry with its rapidly changing conditions has 
placed a heavy burden of responsibility upon our courts. Diffi- 
culties of adjustment unknown until recently have given rise 
to strife involving individual rights and social welfare. These 
contests have been taken to court. There the old-established 
principles constitute the standards. But these are not applicable 
to new conditions. Thus the courts face the necessity of trying 
to perform new tasks with old tools. Upon their ability to 
adjust themselves to the new requirements depends the peaceful 
solution of some of our most perplexing industrial problems. 
The responsibility is two-fold : first, that of passing on legisla- 
tion that departs from former standards, and second, that of 
adjusting individual rights under conditions where collective 
activity prevails. 

With the importance that is attached to precedent, it is un- 
fortunate that so many cases have been decided in the past in 
a manner contrary to the public welfare. This thwarting of the 
public interest has generally resulted from a purpose to protect 
private interests and especially private property. Many of these 
•cases are so widely known and the results so far beyond dispute 
that brief mention of them will suffice. 

Although the Massachusetts court decided in favor of a law 

1 By George G. Groat. Annals of the American Academy. 44:104-13- 
November, 19 12. 



PROBLEMS OF LABOR 291 

restricting the hours oi labor for women as long ago as 1876, 
the court in Illinois, in 1895, refused to allow such a law to 
stand. It was an infringement upon the private right of citizens 
to contract for the length of day. The appeal of a case from 
the Oregon court to the federal supreme court and the 
elaborate opinion upholding the public necessity of such legis- 
lation has finally saved the situation. A new standard for such 
legislation has been established. " The crux of interest was 
reached when the Illinois court, facing the material and the 
weight of authority of the nation's highest tribunal, finally re- 
versed its own decision. The influence of the supreme court 
of the United States has been potent in several states since, and 
uniformly the principle is sustained. It should, however, be 
noted that in New York a decision still stands which holds 
invalid a law prohibiting women from working in certain in- 
dustries during night hours. This legislation the New York 
court regards as an infringement upon the individual rights of 
some of its citizens. 

The effort to restrict the hours of labor in underground 
mines affords another instance of failure to appreciate the im- 
portance of public welfare above private interest. In Colorado 
an eight-hour law was passed applicable to mines and smelters. 
The supreme court of the state held the law unconstitutional. 
This opinion, both in point of conclusion reached and of reason- 
ing, is one of the most unsatisfactory and unconvincing that 
any of our courts has handed down. There appears to have 
been more behind it than simple legal considerations, if the fol- 
lowing statements may be taken with authority. Writing in the 
Century La-w Journal (vol. 62, p. 379 note), A. A. Bruce asserts 
that the case of In re Morgan "is so evidently the result of 
pique and injured dignity, arising out of the fact that the legis- 
lature disregarded the suggestions made by the court in the prior 
case of In re house bill, 21 Colo. 29, that it is worthy of but 
little consideration." Judge Lindsey, in Everybody's Magazine 
(Vol. 22, p. 242 note), says that "Even the laboring men, during 
these troubles, recognized that Judge Campbell's decisions were 
those of an honest prejudice due to his training and his tempera- 
ment." This opinion was held by the Colorado court in spite 
of the fact that the same .principle had been sustained by the 
supreme court of Utah, had been appealed to the federal court 
and there supported. This victory for the Utah measure did 
not assist in securing support for the Colorado law. 



2Q2 SELECTED ARTICLES 

While the United States supreme court has these two de- 
cisions to its credit, there is another side to the account. One 
case is that of the New York bakeshop law. One of the pro- 
visions of this law was the limitation of the hours of labor for 
those working in bakery and confectionery establishments. The 
highest court of the state on appeal sustained the law. The su- 
preme court of the United States held it unconstitutional. In 
this unusually interesting case twenty- two judges were on the 
benches of the several courts. Of these, twelve in all voted in 
favor of the law. In the highest state court it was sustained by 
a majority of one, and in the federal court it was overthrown 
by the same narrow majority. Five opinions were written by 
the New York judges and three in the federal court. Much of 
the argument that led to the annulling of the law is of the ex- 
treme conservative type. In some parts the opinions even border 
upon an attempt at the facetious, as where Judge Bartlett writes 
that the claims of danger to health in this industry "will surprise 
the bakers and good housewives of this state ;" and further that 
the risks to health shown in the evidence are "not to be con- 
founded with the avocation of the family baker, engaged in the 
necessary and highly appreciated labor of producing bread, pies, 
cakes and other commodities more calculated to cause dyspepsia 
in the consumer than consumption in the manufacturer." This 
opinion is to be classed as one of the most reactionary. The re- 
suits were disastrous to a much-needed reform. The findings 
of a commission, the legislation based on those findings, and 
the views of the majority of the state's highest court all were 
set aside as unreasonable. The measure interfered with private 
rights. If the results are to be secured now it must be through 
the insistance of the bakers with prospects for a strike and 
much industrial loss. A further influence of this decision mani- 
fested itself as late as 1910 when the supreme court of Missouri 
on the authority of this opinion invalidated a law of that state, 
one of the provisions of which restricted bakers to a six-day 
week. 

Even the briefest reference to this class of cases should not 
omit the widely known New York tenement house case. It has 
been the bulwark of protection of private property rights against 
public interests and in the view of most eminent authority it is 
directly responsible for the existence of tenement house prob- 
lems, slums and sweatshops in all of our large cities. The opin- 
ion, it will be remembered, denied the constitutionality of a law 



PROBLEMS OF LABOR 293 

prohibiting the manufacture of cigars in tenement houses. The 
basis of the opinion was the freedom of the property owner to 
the income from his tenement houses and the freedom of the 
occupant to engage in his own home in any occupation that 
pleased him. That is to say, the law was a violation of personal 
liberty and private property when conditions as understood by 
the court did not warrant it. In this opinion the justices strayed 
so far from the reality of the present-day tenement life as to 
refer to the situation created by the law as one that was in- 
tended to improve the health or the morals of the cigar-maker 
"by forcing him from his home and its hallowed surroundings 
and beneficent influences to ply his trade elsewhere." 

Space will not allow even brief reference to the experience 
of many of the states with social legislation. The socially 
necessary measures have often been subjects for legislation 
which courts have many times been called upon to test in the 
light of constitutionality. In some instances the laws have been 
upheld while in others they are annulled. The grounds on 
which the decisions are based are quite uniformly the unwar- 
ranted interference with property rights, individual rights and 
rights of contract. Industrial peace depends so directly upon 
the enactment of such laws that until courts come to view them 
as in accord with social necessity, and therefore not contrary to 
the requirements of the constitution, there must remain elements 
of discord. 

Turning from this field of legislation it is necessary to con- 
sider the attitude of the courts when the activities of labor or- 
ganizations are involved. Here there is also confusion. The 
difficult problem is in adjusting individual rights established in 
a day when industrial relations were simple to rights of groups 
in collective activity with industrial relations highly complex. 
The difficulties and the disagreements may well be illustrated by 
reference to strikes and boycotts. Slowly the right to strike 
freed itself from the charge of conspiracy and came to be gen- 
erally recognized by the courts. But what are the limitations 
upon this right? The courts are not in agreement in their 
answer. Two views obtain and they are irreconcilable. One 
may be distinguished as the Massachusetts view and the other 
as the New York view. The former has been adopted in the 
majority of decisions. In the opinion of the Massachusetts 
court, as summed up by Judge Loring, "the legality of a strike 
depends . . . upon the purpose for which the employees strike." 



294 SELECTED ARTICLES 

In support of this view, and in further definition of it, the same 
court has more recently said that "whether the purpose for 
which a strike is instituted is or is not a legal justification for 
it is a question of law to be decided by the court. . . . The 
strikers must in good faith strike for a purpose which the court 
decides to be a legal justification for such interference. . . . 
A strike is not a strike for a legal purpose because the strikers 
struck in good faith for a purpose which they thought was a 
sufficient justification for a strike." The court nowhere defines 
the legal purpose in such a way that unions may be guided by 
the definition. Each instance must come as a separate case to 
be decided on its merits. 

Compared with this view, that of the New York court seems 
extreme. As formulated by Chief Justice Parker it held in the 
most unqualified way that laborers may strike for any reason 
that seems to them sufficient. These reasons they need not 
even state. If they do choose to express them "their right to 
stop work is not cut off because the reason seems inadequate 
or selfish to the employer or to organized society." Here is a 
situation that contributes to industrial restlessness, and evi- 
dently must continue to do so as long as a strike that is legal in 
one state would not be regarded by the court of another com- 
monwealth. 

Though boycotts are so generally connected with strikes the 
courts treat them on quite different principles. The motive is 
generally held as material, and as it is to harm the business of 
another in order to force a concession on the part of its owner, 
that motive is easily understood to be unlawful. As to the pres- 
ent legal status of boycotts there can be no doubt. In some 
states they have been the subject of statutory enactment. Courts 
have decided very positively against them. The United States 
supreme court has held that they are not only in violation of 
freedom of interstate commerce but are violative of common 
law rights of property. "There is no doubt," it declares, "that 
at common law every person has individually, and the public 
also has collectively, a right to require that the course of 
trade should be kept free from unreasonable obstructions." In 
the Bucks Stove and Range boycott case this same court refers 
to printed statements such as "unfair" and "we don't patronize" 
as "verbal acts" expressive of "force not inhering in the words 
themselves, and therefore exceeding any possible right of speech 
which a single individual might have." In spite of these ex- 



PROBLEMS OF LABOR 295 

pressions, other opinions indicate that a distinction is beginning 
to appear. While the development is much tardier than in the 
case of strikes, there is a positive note indicating that the boy- 
cott is not to be uniformly condemned. If practiced within 
limits it is allowed in some jurisdictions. Even the principle ac- 
cepted by the federal court is not followed by some state courts. 
The line of reasoning in these latter cases is too long to trace 
here. Four opinions may be introduced as evidence, however: 
Payne v. Western Atlantic Railroad Co. (Tennessee, 49 Am. 
Rep. 666) ; Marx & Haas Jeans Clothing Co. v. Watson (Mis- 
souri, 67 S. W. 391) ; Lindsay & Co. v. Montana F. of L. (Mon- 
tana, 96 Pac. 127) ; Parkinson Co. v. Building Trades Council 
(California 98 Pac. 1027). In a still later case, Pierce v. Stable- 
men's Union, the California court goes even further in refusing 
to declare a boycott per se illegal. It argues that one may be- 
stow or withhold his patronage as it may please him, thus placing 
the boycott on the same broad principle as the strike. With 
primary goes the secondary boycott, in the opinion of this 
court. Going further, perhaps, than any other opinion, it is held 
that strikers may engage in a boycott; meaning that they may 
withdraw social and business intercourse by all legitimate 
means, and by "fair publication and fair oral or written per- 
suasion" may induce others to do the same. They may go 
further and use "moral intimidation and coercion" to "threaten" 
a like boycott, thus bringing in third persons, a secondary boy- 
cott. Here the court takes what it characterizes as "advance 
ground" and "recognizes no substantial distinction between the 
so-called primary and secondary boycott." Each of these forms 
rests upon the right of the union to control its own patronage 
and to induce by fair means others to do the same. As the 
unions would have the "unquestioned right to withold their 
patronage from a third person who continued to deal with 
their employer," they must have the right to notify them of 
their intended action. 

Such are some of the differences that have developed in the 
effort to formulate out of the old material principles that will 
be adaptable to the conditions of industry that prevail to-day. 
As with social legislation so in these instances evidence is not 
wanting that courts are making a distinct contribution to the 
interests of industrial peace, though disturbing elements are still 
present. 

It is evident that before our courts can make themselves 



296 SELECTED ARTICLES 

of the highest usefulness in solving the perplexing problems of 
the present and in establishing more firmly peaceful relations 
in industry, some very important changes must be made in their 
attitude. In a more elaborate study the writer has endeavored 
to show more in detail the important elements of this situation. 
In "The Attitude of American Courts in Labor Cases," extracts 
from a large number of opinions are brought together from 
which conclusions are drawn. Stated briefly because of the limi- 
tations of space these necessary changes must include the fol- 
lowing. 

The sacredness of precedent, an exaggerated form of respect 
for former opinions and an overdone, desire to preserve con- 
tinuity in legal decisions, undoubtedly result in checking health- 
ful lines of progress and estopping some highly beneficial legis- 
lation. The courts exhibit at times an almost blind devotion to 
this principle, and so long as they continue in this extreme the 
cause of industrial peace must suffer. Adherence to precedent 
must be less rigid. If conditions have so changed as to alter 
the applicability of a legal principle, the knowledge of such con- 
ditions must be as clear and keen in the minds of the court as 
that of the principle. This will bring greater freedom from the 
binding force of precedent and a correspondingly wider margin 
for variation to suit new conditions. There can be no doubt 
that blindness to conditions has led courts in the past into seri- 
ous error, as they have insisted on enforcing a principle where 
conditions were no longer suitable for such a course. 

Legal training, accountable for much that is reactionary, 
must be changed. Severe comment on the content of text-books, 
on the law's backward look and on the stereotyped phrase is 
already beginning to appear. The pages of law magazines are 
speaking in open criticism of the past and expressing clearly 
formed demands for the future to the end that courses of law 
be modernized and socialized. The relation between sociology 
and jurisprudence is a topic both timely and profitable. Some 
of our leading jurists have already indicated a sense of responsi- 
bility to the present as well as the past. The number is increas- 
ing. The sentiment that indicates hope for the future has been 
well expressed by Mr. Justice Holmes: "In my opinion econ- 
omists and sociologists are the people to whom we ought to 
turn more than we do for instruction in the grounds and foun- 
dations of all rational decisions." Speaking again, this dis- 
tinguished jurist declares that "the true grounds of decision are 



PROBLEMS OF LABOR 297 

considerations of policy and of social advantage, and it is vain 
to suppose that solutions can be attained merely by logic and 
general propositions of law which nobody disputes." That an 
increasing number of judges appear to be adopting the principles 
thus expressed, though in our haste the increase may seem 
exasperatingly slow, is an element that greatly brightens the 
outlook. Yet changes in this direction must come at a greater 
pace, as at best they can manifest their results but slowly. 

The former views of individual rights must be decidedly 
modified. They must be given a social content. The possibil- 
ity of individual rights remaining unmodified amid rapidly 
changing conditions of society is very remote indeed. While the 
declarations of rights in cur constitutions have uniformly de- 
clared in general terms for equality of personal rights, such 
rights have never been uniform in fact. Applicable at first to 
civil conditions they are now being carried over into the in- 
dustrial field. Here the equality has been less evident. Yet our 
courts have not fully realized this and have continued to use 
expressions once full of meaning in real life but now quite 
empty. Judges, as well as others, must apply what is really 
a very commonplace fact, that where there is a practically un- 
equal distribution of rights, and an effort is made to equalize it, 
rights and privileges can be enlarged on one side only by cur- 
tailing those on the other. To continue to insist on the inalien- 
able right of one in face of an expanding right of another is 
highly impractical. The slave had nothing to say concerning 
his condition. The owner had unrestrained freedom. It was 
impossible to free the slave without a corresponding limitation 
of the rights of the former master. Under conditions of in- 
dividual wage contract it may fairly be assumed that in an 
earlier generation the rights to contract were about equal. 
More and more it is now true that men are employed by proxy 
and are hired in gangs. Conditions of labor are fixed by the 
employer and the laborer may accept them or let the work 
alone. Collective bargaining is one means of equalizing the 
situation. Yet when this method becomes so effective as to turn 
the tables against the employer and leave him a similar alter- 
native, courts see differently. The federal supreme court in 
the Bucks Stove and Range boycott case discovers the in- 
equality when it says, "But the very fact that it is lawful to 
form these bodies [labor unions], with multitudes of members, 
means that they have thereby acquired a vast power, in the 



2 9 8 SELECTED ARTICLES 

presence of which the individual may be helpless." When col- 
lective bargaining has not accomplished a needed result, legis- 
latures have sought to equalize the conditions by statute. Some 
courts accept such measures as of practical necessity. Others 
reject them. The course of procedure in cases where these 
laws are overthrown is quite uniform. The argument presented 
is that the law is an infringement upon rights of contract. The 
employee is not at liberty to contract for long hours, irregular 
pay or some other conditions unfavorable to him. The em- 
ployer thus takes up the fight in behalf of his employee whom 
the legislature is seeking to deprive of his constitutional rights. 
Hearing these rights expressed in the conventional form of 
individual relations, the courts lose sight of the conditions that 
really determine the situation and the decision is handed down 
in favor of the employer's contention. Be it said that at least 
twice the court has seen the real situation in the case. Once 
the Washington court points out that the law is contested only 
by contractors who would reap benefits by the law's repeal. 
Again, the federal supreme court shows that the employer 
virtually claims that the act "works a peculiar hardship to his 
employees whose right to labor as long as they please is alleged 
to be thereby violated." The opinion adds significantly, "the 
argument would certainly come with better grace and greater 
cogency from the latter class." Such interpretations of indi- 
vidual rights in modern industry as have been made in many 
of these cases cannot contribute much hopefulness for con- 
tinued industrial peace. It is one of the lines in which most 
serious consequences follow. Constitutions are made instru- 
ments for depriving of their rights the very ones whom they 
are intended to protect and who stand most in need of their 
protection. A restatement of constitutional rights in terms 
social rather than individual is a change that is imperative. 

Finally, a matter of prime importance in the interests of in- 
dustrial peace is the attitude that courts take toward the com- 
mon law. Common law is essentially changing in its nature. 
To contend that it has the permanency of the constitution 
seems wholly untenable. Yet such appears to be the view of 
some courts. The opinions in the recent cases of workmen's 
compensation may be taken in evidence, as they clearly show 
a difference of view and a tendency to confuse the common 
law with the principles of the constitution. In all of these 
cases it is freely admitted that the legislation is "economically, 



PROBLEMS OF LABOR 299 

sociologically and morally sound." To speak of the common 
law as adequate to the problem, declares the Wisconsin court, 
"is to jest with serious subjects, to give a stone to one who 
asks for bread." Speaking more directly in relation to the com- 
mon law the Massachusetts court is of the opinion that "the 
rules of law relating to contributory negligence and assump- 
tion of the risk and the effect of negligence by a fellow servant 
were established by the courts, not by the constitution, and the 
legislature may change them, or do away with them altogether 
as defenses." Compared with these views the New York court 
manifests a different attitude toward this subject. The con- 
fusion appears most plainly when the opinion states that "The 
statute, judged by our common law standards, is plainly revo- 
lutionary. . . . The radical character of this legislation is at 
once revealed by contrasting it with the rule of the common 

law Under our form of government, however, courts 

must regard all economic, philosophical and moral theories, 
attractive and desirable though they may be, as subordinate to 
the primary question whether they can be molded into statutes 
without infringing upon the letter or spirit of our written con- 
stitutions. . . . When our constitutions were adopted it was 
the law of the land that no man who was without fault or 
negligence could be held liable in damages for injuries sustained 
by another. ... It is conceded that [the liability in the new 
law] is a liability unknown to the common law and we think it 
plainly constitutes a deprivation of liberty and property under 
the federal and state constitutions." 

In discussing thus the work of the courts it must not be in- 
ferred that they do not serve a useful purpose. Conservative 
forces society must have or there would be no continuity. 
Courts conserve our former experiences and enable us to profit 
by. them. So long as changes come slowly there is time for 
a readjustment with less friction. But in our day changes come 
with unparalleled rapidity. Friction must be present because 
of the very nature of the work that our courts have to do. 
It may be greatly lessened, however, if judges will realize the 
facts and endeavor to be governed by them. A greater degree 
of socialization must come. At present it is coming without 
much assistance from the courts. It need not be so. With sucn 
changes accomplished as have been indicated the progress 
toward the socialization of industries will be rapid. The situ- 
ation cannot be summed up in brief better than in the words 



300 SELECTED ARTICLES 

of the opinion from the Wisconsin court: "When an eighteenth 
century constitution forms the charter of liberty of a twentieth 
century government, must its general provisions be construed 
and interpreted by an eighteenth century mind surrounded by 
eighteenth century conditions and ideals ? Clearly not. This 
were to command the race to halt in its progress, to stretch the 
state upon a veritable bed of Procrustes." 






LIMITATION OF OUTPUT 

WHO LIMITS OUTPUT? 1 

Cost of living has been rising steadily since the armistice 
of nearly a year ago. It has risen to a point where relief must 
be secured. So long as the public was able to pay it paid, though 
not without complaint. Finally, however, the point of inability 
to pay has been reached. 

The high cost of living situation has not been without its 
interest for Labor which must find itself involved in every- 
thing which has to do with the life of the people. In this case, 
as in so many other cases, a certain section of the public press 
has shown its willingness to misrepresent the position of labor, 
and to report falsely its activities. In the main, there have 
been two misstatements that end to give the public a discolored 
view of the case. These are : 

i. That increases in wages are necessarily followed by in- 
creases in prices, which in turn are followed by demands for 
further increases in wages, to be again followed by necessary 
increases in prices, and so indefinitely around the circle. 

2. That there has been an underproduction of goods, due 
to Labor's determination not to work at full speed. In other 
words, that there has been a limitation of output by Labor. 

In the first place it is not true that increases in wages must 
be followed by increases in prices to the consuming public. 
If this were true it would follow that profiteering does not 
exist. It needs no proof here to establish the fact that profi- 
teering does exist and has existed since the armistice, if not 
before. So high an authority as the President of the United 
States has made it perfectly plain that there not only is profi- 
teering but that this profiteering is of the most flagrant and un- 
justifiable nature, and that it wants the most drastic action of 
the nation in the way of curtailment. 

The fact is that instead of higher prices being made neces- 
sary by higher wages the reverse is the case. With the possible 

1 By Samuel Gompers. International Molders' Journal. 58:878-81. 
November, 19 19. 



302 SELECTED ARTICLES 

exception of a minor example here and there, of which there 
is no record, higher wages in every case have been made neces- 
sary by an inflation of prices which has made it impossible for 
workmen to live without an increased income. If, following in- 
crease in wages, prices have been again raised it is not because 
of pressing necessity but because of the desire for greater profit. 
Labor has been compelled to engage in a constant and bitter 
struggle to keep wages as near as possible to the ascending scale 
of prices. 

Instances without number can doubtless be discovered where 
the addition of a fraction of a cent per article in wage costs 
has been passed on to the consumer by the addition of nickles 
and dimes and quarters in the cost to him. If a workman is 
compelled to face an increased cost of living of a dollar per 
week after getting a wage increase of 10 cents per week, nothing 
remains for him to do but to again seek a wage increase. This 
is exactly what is being done throughout the country. 

It may be conceded that the supply of commodities in the 
world is below normal. It is a fact beyond dispute that during 
the period of the war much of the world's normal productive 
capacity was turned to the making of instruments of distruction, 
and that for this reason and for the reason that great masses 
of men were withdrawn entirely from production, the supply of 
commodities for normal consumption fell far below the average. 
But it is also true that the people everywhere understood the 
honest and actual shortage of supplies and made the best of it. 
Where there still exists a shortage due to the war they will 
continue to make the best of it, providing that shortage is not 
aggravated by profiteering. That section of the press which is 
not given to being overly careful in statements concerning 
Labor is likely to make no fine distinction between shortage of 
commodities and profiteering in commodities. Nor is it likely 
to do anything that will remove the impression that Labor, hy 
its own decision, is contributing to the shortage of commodi- 
ties through conscious limitation of output. 

Typical of much that is appearing in the nation's newspapers 
is an editorial in the Chicago Tribune from which we quote the 
following : 

If pre-war energy, expended at the then rate made possible the normal 
production plus enough to give us a slight surplus during the war, it fol- 
lows that we can not replace that lost surplus and ttill maintain the 
normal demand by any lessening of energy. 

Prof. H. G. Moulton explains that high prices is only a manifestation 



PROBLEMS OF LABOR m 303 

of shortage and that obviously the shortage must be mad« up before normal 
conditions can return. 

"We may eliminate all profiteering — however defined — (and incidentally 
the word has attained a brisk and spurious meaning — Ed.) sell all the sup- 
plies the government still possesses . . ." says Prof. Moulton, "compel 
the emptying of all storage warehouses . . . and we might temporarily re- 
duce the level of prices by perhaps 2 or 3 per cent, though the result 
would undoubtedly be higher prices a few months hence. ..." 

We must not delude ourselves into believing that a hard fact can be 
dismissed by temporary expediencj' - . The fact is that production is at a 
low mark. It must be restored by the application of energy. The way to 
have more food is to produce more food. When food is plenty it will be 
cheap. It is possible to seize such store's as are on hand and distribute 
them at reduced prices. But when these stores are gone they can not be 
replaced instantly. Prices go up again. 

The whole tone of this expression is that the producers of 
the world are not producing, that the working people are not 
working as they ought to work. The working people of the 
United States have never considered, much less adopted, a 
policy of limitation of output, and in the last twenty years not 
even has any appreciable group of workers followed any such 
policy. It is foreign to every principle they hold and foreign 
to the whole code of ethics of the organized labor movement. 
It can not be too emphatically stated that there is on the part 
of the American labor no limitation of output of any character. 
The contrary fact is that there is in the United States unem- 
ployment due to the disinclination of employers to conduct 
their establishments at full capacity. Those who think with 
the Chicago Tribune and with Professor Moulton are thinking 
erroneously and in giving expression to their thoughts are doing 
the American working people a grave injustice. Furthermore, 
they are leading the general public to false conclusions con- 
cerning the remedy of the conditions and are therefore doing 
the nation itself the most serious disservice. It follows that if 
the nation is led to believe in an erroneous statement of causes 
it will arrive at erroneous conclusions regarding a remedy and 
therefore will find no way out of the difficulty. 

The truth of the situation is well shown in a report to the 
chairman of the Council of National Defense, made by Gros- 
venor B. Clarkson, director of the council. The report has been 
transmitted by the chairman of the council to the members of 
Congress. 

The report discusses most of the basic industries of the 
country and gives figures showing the extent to which the pro- 
ductive machinery of the country is idle. 

In the matter of clothing, in which prices have been alarm- 
ingly increased, the report says : "The production of civilian 



304 . SELECTED ARTICLES 

clothes and clothing suffered some reduction during the war, 
and has suffered heavy curtailment for many months since the 
signing of the armistice" 

Housing facilities suffered from curtailment of production 
during the war and "for many months following the armistice." 
The report makes the further illuminating statement that "the 
first half of 1919 shows a diminished production of raw ma- 
terials and subnormal construction of new capital and thus in- 
dicates failure to utilise an adequate proportion of our pro- 
ductive forces in the preliminary processes of provision to meet 
future requirements." 

It is declared that for one reason or another, "there ensued 
after the armistice the disuse of a large proportion of America's 
productive capacity. 9 ' 

Certainty, a condition of this character can by no process of 
reasoning be attributed to the working people. Mr. Clarkson's 
report also makes this statement: 

The very fact that prices of finished commodities, consumption goods, 
so-called, have risen to an extent out of proportion to the rise in prices 
of raw materials and perhaps out of proportion to the rise in general of 
wages, indicates that production and distribution carried on under these 
conditions is, in general yielding profits abnormally high. 

A condition such as is described in the paragraph just quoted 
can not be attributed and is not attributed by Mr. Clarkson to 
increased wages for working people. Mr. Clarkson's report indi- 
cates a condition of profiteering. It is just that. 

In the matter of food the report points out what everyone 
must be aware of : the nation's food producing capacity in- 
creased during the war, a fact at once apparent to anyone who 
considers the extent to which the United States during the war 
supplied the world with food products. Yet Mr. Clarkson 
shows that "the average retail prices for 22 selected articles of 
food, which constitute from 35 to 45 per cent of the total ex- 
penditure of typical wage earning families, had increased on 
May 15, 1919, to 91 per cent." 

It is further set forth in the report with admirable con- 
ciseness : 

The high cost of living, in that sense in which that term stands for a 
condition of economic distress, implies not merely high prices, but a corre- 
sponding shortage of income with which to meet those prices without im- 
pairment of the standard of living. The high cost of living, in this 
important sense, means difficulty in securing the means of life. 

A striking example of underproduction due to no forces 
over which Labor has control is cited bv Mr. Clarkson in con- 



PROBLEMS OF LABOR 305 

ncction with the boot and shoe industry. Those who are called 
upon to pay from $8.00 to $15.00 per pair for shoes will read 
with deep interest the following extract from the report: 

The production of boots and shoes for the first quarter of 19 19 was 
reported as about 60 per cent below the production for the last quarter of 
19 18. Plants were partially closed and in some cases it is reported that 
machinery was returned to the shoe machinery company. All in all, there 
were 75,000,000 less pairs of shoes produced in the first quarter of 19 19 
than in the last quarter of 19 18. The census report shows a reduction of 
more than 25 per cent in the output of civilian men's shoes in the quarter 
ending with March 19 19, as compared with production in the quarter end- 
ing with December, 19 18, and nearly 25 per cent reduction as compared 
with the quarter ending September, 19 18. The reduction in output of 
women's shoes amounted to approximately 30 and 25 per cent, respectively, 
in comparing corresponding periods. The reduction in the output of shoes 
for youths, boys and misses was even more marked. 

Other examples of similar import are to be found in the re- 
port but perhaps attention has been drawn to a sufficient num- 
ber. There is, however, in the report, one point of further in- 
terest. In connection with the manufacture of cotton goods 
Mr. Clarkson recalls that during the war the watchword of the 
industry was "output, and more output," but he says that watch- 
word "was not heard after the armistice." He further declares 
that "there soon developed on the contrar}^, groundless doubts 
about the future demand and hints of unhealthy fears of over- 
production." 

If further evidence is required it doubtless can be produced 
in overwhelming volume. Not in any single case on record has 
proof been brought forward to substantiate the charge so easily 
made that Labor has been guilty of restriction of output. 

Labor has been under the necessity of fighting insistently to 
maintain the American standard of living. It has been under 
the necessity of putting forth every possible effort to keep in- 
come through wages as near as possible within reach of the 
rapidly advancing cost of living. It has been the victim of 
profiteering and in one sense a contributor to that national dis- 
grace. 

Labor demands a real relief from profiteering. It under- 
stands thoroughly the necessity for production, being engaged 
constantly in doing the useful and essential work of the world, 
in shaping and making those things by which human life is made 
possible, and, at times, pleasant. . It has a profound understand- 
ing of the value of commodities. It looks upon commodities as 
something to be put to useful purpose. It can have no sympathy 
with any purpose of any movement which has for its object the 
attaching of an inflated value to the products of toil. 



3 o6 SELECTED ARTICLES 

Labor's effort is and must be an honest effort. There are 
fundamental reasons why Labor must forever frown upon the 
fight against all efforts to debase the fruit of Labor in the chan- 
nels of finance and commerce. With every fibre of its being, 
for ethical as well as material reasons, it revolts against that 
which we have come to know and feel as profiteering. 

Labor, with ample reason and proof, places the blame for the 
false situation in which the world finds itself squarely upon 
those who are masters of the productive machinery of the 
world. It demands relief of the most fundamental character. 
In so far as it can contribute thought and good will and help- 
ful effort toward a solution of the world's difficulties, it will 
so contribute with eagerness and gladness. But there must be 
relief and remedy at once. To find that relief and that remedy 
the true situation must be recognized and all false statements 
and conclusions avoided. 

That Labor is a contributory factor to the common distress 
because of a policy of restriction of output is one of the first 
and most flagrant examples of falsehood which must be dis- 
carded. Only a frank recognition of facts will help toward a 
final constructive solution and nothing less than that will satisfy 
a weary and war-worn world. 



PRODUCTION THE GOAL 1 

The urgent necessity for increasing and "speeding up" the 
output of munitions and other essential materials during the 
war, and the prospective unprecedented demands following the 
period of devastation and non-production, have focused atten- 
tion, as never before, upon production — and its attendant prob- 
lems. Probably never has there been such a large number of 
people from various walks of life, so many industrial managers 
and so many workers, in seeming agreement that the aim or 
principal problem of industry is production. But, in spite of 
this glib consensus of opinion on generalities, there has been 
little evidence of real thinking concerning the subject. 

While a very worth while forward step in industry has been 
taken by this quite sudden and general recognition of produc- 
tion as the master aim of the industrial plant, yet it is doubtful 

1 By George L. Bell. Impartial Chairman, Men's and Boys' Clothing 
Industry, New York City. Annals of the American Academy. September 
xoio. 



PROBLEMS OF LABOR 307 

if the forward impetus can be maintained and concrete achieve- 
ment attained by this more or less emotional recognition of a 
general principle. The word "production" seems to have widely 
different meanings for many who agree in using the word to. 
describe the principal problem confronting industrial plants. 
There would be more opportunity for real, constructive progress 
if we could arrive at an actual, though limited and partial, 
agreement on the subject. 

As a fundamental basis of agreement industrial management 
must squarely face and accept the fact that the peoples of the 
world today are not and will not be interested in production at 
any or all costs, or in production that ignores the human fac- 
tors. There was a time, not long past, when there was not a 
very general appreciation of the "safety first" movement, and 
even today there is a discouragingly large minority of industrial 
managers who do not feel it to be their imperative duty to take 
every precaution to protect the workers from physical injuries 
in their plants. But all except the most "conscientious objectors" 
to change of any kind must admit that during the war period a 
new spirit or consciousness has developed among all workers, 
and among many employers and managers, which not only 
makes impossible the evasion of responsibility for the physical 
safety of employes, but which demands prompt and careful at- 
tention to many more intangible and intricate phases of the 
problems presented by the human element involved in produc- 
tion. It is not a theoretical situation which we are facing in 
this connection, but present and pressing facts, already clearly 
apparent in most civilized countries. The forward looking in- 
dustrial manager today realizes that no longer can he aim at in- 
creasing production and profits ad infinitum by methods arbi- 
trarily devised by the management alone and likewise arbitrarily 
imposed on the workers. Whatever his individual opinions 
may be, he is confronted with the fact that workers in this new 
era are not and will not be interested in production unless they 
are given some voice in the determination of the processes of 
the plant and in controlling the conditions under which they 
work — or, as it is commonly expressed today, "workers must 
have more share in the management." Labor and enlightened 
employers present today a solid front in demanding that the 
workers must be considered as integral human parts of the plant 
and that industry must be so constitutionalized that some sort 
of real industrial suffrage or franchise is possible. 



308 SELECTED ARTICLES 

If, therefore, we are to arrive at any real agreement between 
management and workers to cooperate in increasing production 
we must conceive of the master aim of the plant as being such 
production as is compatible with a real and measurable degree 
of human happiness and content in the work. Obviously this 
aim must not be so constructed as to convert the plant into a 
mere experimental laboratory for the testing of "labor theories," 
for this would be merely reversing the former prevalent situa- 
tion where the management imposed and tested its theories of 
production processes without giving much if any consideration 
to the effect upon the human factors. The aim must be carried 
out only by careful and scientific consultation and practical 
experimentation. The entire personnel of the plant must be 
made articulate in some way in order that each person may as- 
sume responsibility for and participate in the determination and 
definition of the production standards. 

This modern concept of the aim of industry extends beyond 
the field of mere quantitative output and requires that each 
producing group render some greater service to the community 
and the world than the mere supplying of material goods. As a 
prominent leader of industry recently said, "Service to the 
world, not profit to ourselves, must henceforth be the guiding 
thought of business men." Plant owners and executives, there- 
fore, must take the initiative and determine first their own 
functions and place in this new order. The board of directors 
of a large western department store, after an exhaustive study 
of this particular question, recently passed a resolution includ- 
ing the following paragraphs, which seem well worth quoting: 

We emphasize that aspect of our proposed reorganization which may 
be termed the democratization of the establishment. But there is another 
way to approach the same situation. We would look upon the plant as a 
great training school in which every employee from the executives down, 
is at the same time a student and a teacher. 

It is just here that we as managers must find our excuse for existence. 
If every employee in this business comes to us < fully trained, fully equipped 
to take his part properly in the scheme of things, then the employees are 
running affairs, and we can hardly justify our accepting profit. We are 
entitled to profit only in the measure of our contribution to the working of 
this business. Our task is not to sweep floors, to wash windows, to keep 
books, to fill orders and sell goods. Directly and immediately, that is the 
business of our employees. But it is our province to make better sweepers, 
window washers bookeepers, order fillers and salesmen of our employees. 
It is not enough if we be bosses on the job, and mere task-masters. We 
must constructively contribute to the symphony, by supplying ideals, by 
devising processes, _ improving methods, inventing equipment, and training 
hand, heart and mind, if we would earn that portion of the income called 
not wages, but profit. 

But, it may be said, we supply the capital to run the business. For 
that we are entitled to interest, not profit. Or again, we buy the goods. 
In so far as that is true, we are entitled to wages, not profit. We assume 



PROBLEMS OF LABOR 309 

the risk, in bad years as well as in good. True, and for that we are en- 
titled to another kind of interest, not profit. Profit, when justly earned, 
is a reward for a particular kind of service which the employees them- 
selves do not contribute. 

"The employee no longer exists merely to aggrandize and extend the 
personality of the employer, but the latter exists solely to make effective 
the totally different function of the employee." (Harrington Emerson.) 

Failure to realize this magnificent opportunity we have to make of this 
business a grand training school of technique and character carries its own 
penalty. We have but mediocre help, and that is expensive. We have a 
rapid labor turnover. When we require a man to fill an important post 
often we go on the outside. Lack of a system of training makes promo- 
tion a rare thing, and consequently deprives our people of hope based upon 
a^ laudable ambition. Our service to our customers cannot be the best. 
Consequently, our own profits are not so large as otherwise they might be. 

The above paragraphs might be considered of little practical 
value if they were written as part of an academic treatise by a 
theoretical economist, but they embody the conclusions of a 
group of eminently successful business men made after an inten- 
sive study of their own establishment — an establishment gener- 
ally admired by the public and which the casual observer would 
say w T as in no need of reorganization. Industrial executives 
must acquire something of this spirit if they, or their plants, 
are to render effective service in the new era that is upon us. 
Production must be made to serve individual needs, not merely 
the promotion of the general wealth. Production should be 
organized not merely upon the basis of money or profits but 
upon the basis of real human satisfaction. Stephen Leacock 
has well said, "The continued increase of the sum total of wealth 
as a concomitant of machine production does not of itself pro- 
mote individual welfare, with which indeed, it has but little con- 
nection." Much of the present discontent among workers is 
undoubtedly due to the necessity for performing uncongenial, 
monotonous machine work that seemingly follows a blind alley 
and denies ambition opportunity. The plant must be so organ- 
ized as to allow each individual in the producing group to see 
the complete picture of the aims of the plant and his part in 
the structure as a whole; it must afford opportunity for satis- 
fying the creative instinct — the primitive human instinct of love 
of work, which is so apt to be thwarted by specialized machine 
production; it must provide the ladders of promotion which the 
worker may climb if he will. 

Not all embracing formula can be devised for carrying out 
these aims of industry. There is an unfortunate tendency today 
to install static plans for the "solution" of the new industrial 
problems. In the attempt to encourage an interest in produc- 
tion, too many managers are adopting forms and phrases with 



3 io SELECTED ARTICLES 

little real substance. With small appreciation of the full mean- 
ing and spirit of the goal toward which the new industrial world 
is groping, efforts are being made, usually in good faith, to im- 
pose cut and dried "profit-sharing" plans, "industrial legislative 
councils," or "shop committees," on unwilling or apathetic em- 
ployes. Industry is ever changing and progressing; therefore 
we can have no uniform, static, nor rigid, "solutions" adaptable 
to changing conditions and the progressive succession of prob- 
lems. The thing that is possible and that is truly necessary is 
the creation of the human machinery or organization, based on 
broad general principles agreed to by all in the plant, ready at 
all times to study and meet questions as they arise. The name 
and form of the organization matter little so long as all in- 
dividuals in the plant are truly represented and given a real 
voice in evolving the answers to new or recurring problems and 
in adapting the aims of the plant to the developing ideals of 
production and service. 

There is, however, the danger of a too sudden reformation 
and the consequent exercise of an autocratic paternalism in 
attempting to keep up with the new movement. There must be 
no "crusade" nor "campaign" which smacks of "uplift," for 
management and employes today have in common an abhorrence 
of being "uplifted." Though, as the result of panicky reaction 
to industrial unrest, many may try to build the new structure 
of industry on a foundation of mere emotional sentimentality, 
there must be a firm economic basis if the structure is to sur- 
vive. Charity cannot be the compelling motive because it is not 
the aim to develop the industrial plant into an eleemosynary in- 
stitution. Moreover, the workers who are seriously and sin- 
cerely pressing for a larger and broader participation in in- 
dustry are not asking, and do not want, to be given things to 
which they are not entitled as a matter of economic and ethical 
right. If owners and managers alone determine and define the 
production that they think will best contribute to the happiness 
of the individuals involved, and if, with the generous gesture 
of industrial overlords, they give more freedom and opportunity 
to workers, the real and higher aims of industry will be de- 
graded. 

In the development of the economic basis for the new struc- 
ture there should be collective or group action, for only thus 
can the idea of collective responsibility be engendered. Scat- 
tered, uncoordinated individual action should be avoided, for 



PROBLEMS OF LABOR 311 

interest in group production means that the plant becomes a real 
entity and power for service to humanity. The management 
and the workers must study and try to understand each other's 
peculiar and distinct problems, and they must work cooperatively 
in solving these problems. It is submitted that profit-sharing 
schemes would meet with greater success if the workers were 
taken into real partnership on problems as well as profits. Effi- 
cient management is, of course, the exclusive duty of the plant 
executives, but the workers would be more convinced of the 
sincerity and motives of the management, and more stimulated 
to productive effort, if the difficulties confronting plant execu- 
tives were explained as fully as possible to all in the plant, and 
if the processes of reasoning and deduction upon which orders 
and plans are based were likewise made clear. 

There is no doubt that each worker owes a fair day's return 
in labor for his wages, but before the employer can demand 
this return he must have fulfilled an obligation which is abso- 
lutely a condition precedent — the providing of efficient manage- 
ment. And in the new industrial order an ever higher and 
higher degree of efficiency will be required of management. Be- 
fore we can talk of enlisting more general interest in increased 
production or of developing the higher conception of the func- 
tions of industry that seems to be struggling for expression, 
there must be a much more comprehensive, thorough and de- 
tailed study of the processes and costs of production. Manage- 
ment cannot spur the workers to greater activity by merely 
shouting "More ! More !" ; it must present definite standards 
of accomplishment for consideration by the workers and the 
proposals must be backed, not by the forceful language of a task 
master, but by convincing and accurate data obtained by ex- 
haustive general research as well as intensive study of the plant 
operations. It is primarily the duty of the management to bring 
such information to the council table, and only with such in- 
formation at hand can "every employe, from the executives 
down, be a student and a teacher" in the great permanent train- 
ing schools which are to chart the paths of real service to hu- 
manity which industry is destined to follow. 

Another development in the evolution of industry which is 
just becoming apparent is the breaking away from the habits 
of secretiveness, isolation and hostility between individual plants 
in connection with even non-competitive matters. It is now 
realized that competing as well as non-competing establish- 



312 SELECTED ARTICLES 

ments have many problems in common — and certainly, at least, 
the labor problem — in the handling of which they must cooper- 
ate. Standardization and constitutionalization of industries en- 
gaged in the same line of production on a national, if not an 
international, basis of research and determination of policies 
must assuredly come, and the spirit of provincialism must be 
discarded if we are to make worth while progress. To take 
part actively in such broader developments must be one of the 
conscious policies of every plant. 

As a summary statement, it might be said that the keystone 
of the arch of the new industrial structure is to be found in 
the full publication of facts. Industrial relations should not be 
made into an involved "problem" through complicated and un- 
natural forms of plant organization. There should be estab- 
lished the simple principle that all the workers in the plant 
should be given an opportunity to contribute to the detailed 
study of all the facts bearing on finance, and on processes and 
costs of production, and all such facts should be open to full 
examination and discussion. If all the facts are not so exposed, 
then there is the suspicion of an unworthy motive in concealing 
something. Concealment is certainly not in keeping with the 
modern and rightful aim of the plant. With all the data before 
the management of the workers, there is an opportunity for 
openly arriving at an agreement on the principles and the 
methods of dividing the income of the plant — then there is some 
possibility of establishing the often repeated assertion that 
"the interests of employers and labor are really identical," be- 
cause there will be some common gain to both in increased 
production. Arbitrary power on either side, whether in connec- 
tion with industrial relations or any other human relations, is 
dangerous and unsound; there must be concessions of power by 
common consent which will result in common advantages. 



. INDUSTRIAL INSURANCE 

INDUSTRIAL INSURANCE 1 

Medical Examination of Employees and Prevention of 
Sickness its Proper F oundation 

Industrial sickness insurance constitutes a logical means by 
which society may equitably distribute the costs resulting from 
physical inefficiency. No sound argument can be advanced 
against the propriety of establishing systems of industrial sick- 
ness insurance nor against the economic necessity for such 
systems. 

It is not the purpose of this paper to discuss the fiscal aspects 
of the question. It is enough to state, briefly, that since the 
State, the employer, and the employee are the beneficiaries, 
social justice demands that the costs of industrial insurance be 
borne by all three on a basis of equitable representation. 

It is obvious, however, no matter in what way the burden 
of the cost is divided, that the best scheme of industrial insur- 
ance is the one in which an adequate reserve is maintained at a 
minimum cost. 

It is in this respect that the majority, if not all the systems 
now in force, are defective, in that they contemplate providing 
for the cost of sickness or physical disability only after these 
have become facts. The employee enjoys the benefits of sick- 
ness insurance only after the disease or disability has lasted 
some time. In other words, existing systems of industrial in- 
surance fail to recognize adequately that great principle at the 
root of all present-day campaigns in the interest of public 
health, namely, that of prevention. Too great attention has been 
paid to providing the sick employee with medical attention after 
lie becomes entitled to it by reason of illness, too little to pre- 
venting the illness which entitled him to the benefit of the in- 
surance. The basic principle of industrial insurance, therefore, 

1 By J. W. Schereschewsky. Public Health Reports, vol. 29, No. 23, 
June 5, 1914- 



3 i4 SELECTED ARTICLES 

should be to prevent illness, rather than to pay the costs of pre- 
ventable diseases and disabilities. 

One of the chief objections urged against compulsory in- 
dustrial sickness insurance has been its cost. Such insurance 
must, indeed, be costly so long as the principle of prevention 
is not taken into account. As soon, however, as our systems of 
industrial insurance are placed upon a preventive basis, we may 
confidently look for a great reduction in the cost, with the re- 
sult of a widespread adoption of such systems, greatly to the 
benefit of society at large. 

Granted, then, that systems for industrial sickness insurance, 
in common with other public-health work, should rest upon a 
preventive basis, the primary object of such insurance ' would 
be to detect incipient defects and diseases among workers, or 
to prevent the development of diseased conditions by proper 
precautionary measures. It is evident that this object will be 
most readily attained by means of the frequent periodic physical 
examination of employees and an inspection of their environ- 
ment. In no other way can the first beginnings of disease be so 
readily detected, or the adverse influence of unhygienic condi- 
tions averted. It is to be understood, of course, that we are not 
to rest content with the mere detection of such incipient defects 
and diseases, or of unhygienic conditions among workers, but 
their discovery should go hand in hand with an earnest effort 
to discover the adverse factors at the root of the matter. The 
inquiry, therefore, is not to be terminated until the offending 
condition has been removed and progress has been made toward 
renewed health and efficiency. 

It becomes evident in the course of such inquiries that not 
only must bad shop conditions be taken into account but the 
conditions of the worker's total environment be subject to 
scrutiny. In many instances the origin of the defective state 
may be the unhygienic home rather than the unhygienic work- 
shop. 

This means, in the medical organization of the industrial in- 
surance of the future, that preventive work will greatly expand 
the horizon of our existing activities. 

We are already beginning correctly to evaluate the import- 
ance of periodic physical examinations in maintaining a con- 
tinuous state of physical efficiency. Whenever these have been 
carried into effect, they have resulted in the detection of numer- 



PROBLEMS OF LABOR 315 

ous defects, or diseases, in their incipiency, and made it possible 
to apply suitable remedies before irretrievable damage has been 
done. 

What is needed, however, for the sanitation of industries and 
the reduction to a minimum of the enormous annual loss to 
workers through preventable illness and disabilities is a rapid 
extension of such periodic physical examinations and an exten- 
sion of the prophylactic work beyond the confines of the shop. 

As an adjuvant, therefore, to the data obtained by the phys- 
ical examination, the sanitary history of the employee, in order 
to be complete, will require the enlistment of the services of the 
social worker, or the visiting nurse, so that his entire surround- 
ings and their effect in producing diseased states can be taken 
properly into account. 

It is needless to say that industrial insurance, operated upon 
this preventive principle, should result in benefits of a far-reach- 
ing character. In the first place, it is the method, par excellence, 
by which the effect of industries upon individual efficiency can 
be properly studied. Under such a system we should not be 
long in getting at the basic facts underlying ill health in so 
many industries, and in working out appropriate preventive mea- 
sures. 

Moreover, an industrial insurance system, based upon the 
preventive work resulting from periodic physical examinations, 
should effect, to a, notable degree, the establishment of hygienic 
standards of living throughout the country. The reduction in 
the loss of working days per employee from illness throughout 
the year should be notable. In this way great economic gains 
with diminished cost of production would result. 

Another notable result would be the formulation of minimum 
hygiene standards for various industries, and the promulgation 
of uniform industrial legislation for their enforcement through- 
out the country. 

Still another good effect of industrial insurance based upon 
preventive methods would be an increase in the efficiency of 
local health authorities. It is plain that the periodic physical ex- 
aminations contemplated, taking into account, as they do home 
as well as factory conditions, must reveal many insanitary con- 
ditions which must, necessarily, be brought to the attention of 
the local health authorities for correction, when, otherwise they 
might not have been detected. In this way the value of the ser- 



3 i6 SELECTED ARTICLES 

vices of local health authorities to the respective communities 
will be enhanced. 

Finally, the cost of industrial insurance, based on preventive 
lines, should be far below that of a system providing benefits 
only after the worker has become ill. The reserve necessary to 
any system of industrial insurance is, of course, dependent upon 
the average frequency of illness. If, by preventive measures, 
we succeed in reducing this frequency, it follows that the re- 
serve, and consequently the cost of the insurance, may be re- 
duced, after proper provision has been made for the cost of the 
preventive work. We are, therefore, justified in coming to the 
following conclusions : 

i. Industrial sickness insurance is an economic necessity in 
modern social evolution. 

2. The basis upon which industrial insurance should rest is 
the prevention of illness and physical disabilities. 

3. Frequent periodic physical examinations of workers con- 
stitute the logical means by which defects and diseases can be 
detected in their incipiency. 

4. The scope of such examinations should be extended to 
include home as well as factory conditions. 

5. Industrial insurance based upon preventive measures 
should redound greatly to the benefit of society. 

(a) by reducing the annual loss of time through illness; 

(b) by establishing hygienic standards; 

(c) by establishing minimum hygienic standards . for in- 
dustries ; 

(d) by favoring the enactment of uniform industrial legis- 
lation ; 

(e) by increasing the efficiency of local health authorities. 

6. The cost of carrying industrial insurance based on pre- 
ventive principles should be less than that of present systems 



HEALTH INSURANCE 1 

Whenever a number of people are subjected to a common 
risk which may entail loss upon them, the insurance principle 
may be applied if the risk is measurable. Since most of the 

* Address by John A. Lapp, Managing Editor of Modern Medicine, 
before the industrial section of the National Conference of Social Work, 
held at Atlantic City in June, 19 19. 



PROBLEMS OF LABOR 317 

risks which people run have, been found by experience to be 
measurable, insurance has come to be applied in many different 
fields. Insurance is merely a distributor of loss. It is based 
upon fairly exact calculations. Fire insurance measures the 
loss from fires and fixes the premium which each dollar's worth 
of property should be taxed as a premium to cover possible 
loss. Marine insurance measures the loss from shipping dis- 
asters and fixes the premiums that are necessary. Life in- 
surance measures the number of deaths that are going to occur 
in each age group and fixes the premiums to cover the loss. 
Numerous other forms of insurance have been devised, includ- 
ing insurance against hail, tornadoes, accidents, burglary, plate 
glass breakage, fidelity, and others. Insurance is well established 
as a business propostion. Very few business men fail to protect 
themselves against serious loss of property. When insurance 
is conceived of as a universal matter applying to all people and 
all losses of a certain kind, it is even simpler of application 
and more businesslike than the voluntary forms of property in- 
surance with which we are more familiar. 

We are coming to recognize the fact that when the people 
of an entire State are subjected to certain risks which are mea- 
surable, it is good business to organize to certain risks which are 
instrumentality of the State, measure the risk, and pay the losses 
which happen at random to this individual or that. We have 
used this principle for many years without recognizing it as 
social insurance. Nearly every State provides a fund by the 
taxation of dogs from which the losses to sheep owners are 
paid. We have established the principle in insurance of bank 
deposits now in force in a number of States whereby a fund is 
collected from the banks in order to pay the losses to depositors 
through bank failures. Still later, we have applied in some 
States the same principle by the collection of funds from a tax 
on agricultural lands to pay the losses from hail. North Dakota 
and South Dakota have done this on a State-wide basis, as have 
also some of the Canadian Northwest Provinces. 

Lastly, we have recognized that State-wide insurance of 
laborers against accident is a simple, practicable, and certain 
way of distributing the economic shock of accident. In a few 
States this principle is applied through the creation of a single 
State fund from which the unfortunate victims of accidents 
draw a part of their compensation and are provided with med- 
ical and surgical care. 



318 SELECTED ARTICLES 

Two Problems of Health Insurance Stated 

These simple statements of the application of the insurance 
principle voluntarily and also on a social basis are made here 
for the purpose of clarifying our thinking at the outset on the 
subject of health insurance. They are too often overlooked. 
Some folks would make us believe that the proposal for social 
health insurance is some new, absurd proposition which has been 
evolved in fantastic minds, when, as a matter of fact, its com- 
ing is nothing but the evolution of sound social and business 
sense. Health insurance proposes to collect a fund from which 
the losses of sickness can be partly paid and medical treatment 
provided on a universal scale. The only problems involved are 
the measurability of sickness and the organization of the 
scheme. 

We have plenty of evidence from every quarter to show that 
sickness is measurable. We know with fair certainty how much 
severe sickness will occur in a large group of people every year. 
We know what that loss entails in the way of lost wages, and 
we can readily measure what the necessary medical care will 
cost. In fact, we know far more in these respects about sick- 
ness insurance than we knew about accident insurance when 
workmen's compensation laws were put in force, and we know 
infinitely more than the people who started fire, life, marine, 
casualty, fidelity, and burglary insurance ever knew about the 
losses from these causes before they successfully established in- 
surance. 

In fact, we have a very good measure of the amount of sick- 
ness which occurs in any normal group of working people. All 
the evidence, which appears to be overwhelming, shows that 
each worker suffers about nine days' sickness every year, and 
that 2y 2 to 3 per cent of the people are sick at all times. The 
findings of the health insurance commissions of Illinois, Ohio, 
Pennsylvania, and Connecticut, from a study of 131,000 cases 
of disability, showed that 20 per cent of the workers suffer a 
disabling sickness every year, lasting for more than seven days. 
These figures show that the cases of sickness lasting more than 
seven days averaged about 35 to 37 days each. These figures 
are borne out by innumerable investigations, and particularly 
by an unpublished study of the Workmen's Sick and Death 
Benefit Fund of America, New York City, made by the United 
States Bureau of Labor Statistics, and by studies of the Federal 



PROBLEMS OF LABOR 3*9 

Industrial Relations Commission and of the United States Pub- 
lic Health Service. 

Not only do we know how much sickness occurs in the 
group but we know with fair exactness how this sickness falls 
on the different people in the group. It appears that 20 per cent 
of a normal group will suffer a disabling sickness lasting more 
than a week; that about 65 per cent of those that are sick will 
be disabled for less than 30 days; that nearly 20 per cent will 
be sick for four to eight weeks; that 6 per cent will be sick 
from eight to twelve weeks; that 3 per cent will be sick for 
more than 6 months; and 1.3 per cent for more than a year. 

We know further that sickness varies with age and that it 
falls more heavily as men grow older. The exact figures as 
shown by the Workmen's Sick and Death Benefit Fund of 
America are as follows : 

CASES OF SICKNESS LASTING MORE THAN SEVEN DAYS 

Average Length of time 

Age. compensated (days) each 

days. case lasts. 

20 years 3-0 22.9 

25 years 3. 1 > *9-4 

30 years 3*7 3^.6 

35 years 4-8 39-6 

40 years 4-3 35-0 

45 years 4-5 35-i 

50 years 5-6 39- 1 

55 years 7.1 44-o 

60 years 8.6 49.5 

65 years 9-i 49-4 

70 years 15-1 65.9 

Total 5-1 38.9 

We know, too, that sickness varies according to occupation, 
in some occupations rising to two and three times the rate of 
other occupations. We know also that there are some variations 
according to sex. These facts we know with fair exactness. 
The}' are not disputed by any intelligent and honest person. 

We have, then, here the proper basis for the establishment 
of an insurance system. We know pretty nearly how much sick- 
ness there is going to be among a million people. We know 
very nearly what the sickness will cost. All we need to do is 
to apply the same principles which we have already applied in 
other respects and provide for tbe distribution of the burden of 
sickness on a communal basis. It is not a leap in the dark. It 
is not a blind attempt to do the impossible. It is simply the ap- 
plication of well-known and well-established business principles 
to the solution of the problem which hangs as a cloud over the 



320 SELECTED ARTICLES 

lives of the people. We know how much sickness there will be 
in a group, but w r e do not know upon which individuals the cost 
of sickness will fall. 

Economic and Social Results of Sickness 

What are the plain results of sickness? It hardly seems 
necessary to repeat them, and yet there are those who would 
deny even the simplest truths when those truths are incon- 
venient to them. 

Sickness drives people from a higher to a lower standard of 
life. It drives people from independence to dependence. It 
keeps thousands on the brink of poverty and it keeps millions 
in the fear thereof. When the wage earner is taken sick, his 
wages stop. Rarely are wages paid beyond the hour when the 
man quits work. But his expenses do not stop — they go on and 
increase. To them are added the cost of medical care, if the 
man does not immediately seek charitable aid. Slender re- 
sources are soon used up. Everyone who appears to have the 
slightest presumption of knowledge is very well aware that the 
rank and file of working men are only a brief space away from 
economic distress. Perhaps the man has some personal credit 
or some helpful friends, but even the benefits of these are soon 
used up if the man happens to be one of the million and a half 
who are sick for four to eight weeks, or of the 230,000 w T ho are 
sick for more than six months. 

The next resort is the chattel loan. Here we find that 35 to 
50 per cent of loans are due to sickness. The next resort is the 
associated charities. Here again we find that 35 to 50 per cent 
of applications are due to sickness. The last resort is outdoor 
public relief, of which we have very little satisfactory statistical 
evidence. We found in Ohio, however, that 30 per cent of the 
people in county infirmaries had been reduced from independ- 
ence by sickness, resulting in their going to the poorhouse and 
that 40 per cent of the old people in private "homes' 1 were be- 
cause of the calamity of sickness at some time in their lives. 

Health insurance merely attempts to stop this steady decline 
from a higher to a lower status. It is intended to insure people 
who are now independent and to keep them from going the 
downward path toward the brink of poverty. It is intended to 
stabilize society above the poverty line so that from this one 
cause fewer people shall descend in the scale of life. No one 



PROBLEMS OF LABOR 321 

can study the figures on this subject and reflect upon the facts 
disclosed without being convinced of the necessity of something 
to prevent the decline in human values and no one can under- 
stand insurance principles without being convinced that the solu- 
tion of the problem rests in social insurance. 

Compulsory v. Voluntary Health Insurance 

The question is raised at this point: "Why make it compul- 
sory; why organize it on a universal scale?" "Why not leave 
it to voluntary action?" The answer is simple. If it is left to 
voluntary efforts it will cost far more than it would as a social 
enterprise. The cost would in fact be more than doubled. We 
have the example before us of the burial insurance companies 
which have been insuring people against a pauper burial on a 
voluntary scale. They probably manage their business well — 
no one has lately charged them with, a lack of efficiency. Dur- 
ing the last three years they have collected $448,000,000, and 
have paid in death claims, $14.8,000,000, or about 33 per cent of 
the amount collected. The people have paid for the privilege of 
voluntary burial insurance in the last three years the sum of 
$300,000,000 over and above what they were paid for burials. 
The casualty insurance companies on a voluntary basis have 
collected in the last twenty years $402,000,000 and have paid in 
losses $175,000,000. Nearly 56 per cent of this enormous sum 
goes for the privilege of regaling ourselves with voluntary in- 
surance. 

Workmen's compensation insurance companies in the last 
five years have received $125,000,000 and have paid $55,000,000. 
Mutual workmen's compensation fundb have received $17,000,000 
and have paid $7,000,000. Commercial health insurance compa- 
nies in fifteen years have received $74,000,000 and have paid 
$33,000,000. 

These huge sums of money have been sacrificed to the prin- 
ciple of voluntary insurance. Set over against them is the rec- 
ord of the Ohio Workmen's Compensation Insurance Fund, 
operated on a State-wide compulsory basis, which shows a 
charge of s J / 2 to 5 per cent for the conduct of the business. A 
pencil and a piece of paper will very quickly tell you what we 
have paid for the privilege of having voluntary insurance. Uni- 
versal social insurance removes the cost of solicitation, removes 
the profits of insurance carriers, removes the absurdly high 
salaries of insurance officials, and in many ways makes the 



322 SELECTED ARTICLES 

money of the insured go further in providing him the benefits 
which he needs in a time of calamity. 

The extent to which voluntary health insurance is now pur- 
chased is the best evidence of its probable failure to meet the 
need for universal insurance. Only about 33 per cent of the 
workers carry any health insurance. Such insurance as is car- 
ried amounts to $5 to $7 a week for about thirteen weeks and 
practically no medical service. In the United States only about 
3 per cent to 5 per cent of losses is distributed by health in- 
surance. There is no evidence that outside of the larger estab- 
lishment funds, medical and cash benefits can ever be so com- 
bined and organized as to be effective. 

The Cost of Health Insurance 

The facts of the case from beginning to end, with scarcely 
a single exception, point to the desirability of establishing a 
State-wide human depreciation fund by the collection of pre- 
miums from those who are responsible for sickness and for its 
care. We know now who those parties are. It is perfectly 
clear that industry is responsible for some diseases, the indi- 
vidual is responsible for some, and the community is responsible 
for some. It is equally clear that two or more of these factors 
combine in certain other cases to cause sickness. It is perfectly 
clear that the line can not be drawn where industrial responsibil- 
ity stops and individual responsibility begins, or where the com- 
munity responsibility begins or ends. Tuberculosis, for example, 
is caused by a combination of two or more of these factors. A 
study in Cincinnati by the United States Public Health Service 
indicated that in 442 cases, 18 per cent were due to industry; 32 
per cent to heredity; 10.8 per cent to intemperance and vice; 
9.7 per cent to housing; and the rest from undefined causes. 
This is merely illustrative of the interrelation of causes of sick- 
ness. No one can honestly say or believe that industry and the 
community should not share with the individual the cost of sick- 
ness. We have heretofore put the principal burden — in fact, 
practically all of it — on the individual. It is time that our social 
conscience be awakened from its slumber and having taken 
cognizance of the awful consequence of diseases, that we shall 
join in a large cooperative undertaking for the creation of a 
fund through the payment collected from causative factors, so 
that the burden of sickness shall not fall as it now T falls — upon 
the individuals who happen to be sick and at a time when they 
are least able to bear the extra burden. 



PROBLEMS OF LABOR 323 

It seems almost incredible that anyone would here raise the 
question of cost. It seems absurd to mention it in this paper. 
There are thousands, however, who make the absurd claim that 
health insurance will be so costly as to overwhelm us. Figures 
are cited to make this loss appear even more excessive than it 
is. How childlike the simplicity of such people. If sickness is 
costing $2,000,000,000 to-day, somebody is bearing it, and who is 
that somebody? If the burden is too great for the whole society 
to bear, it is a pretty fair evidence that it is altogether crushing 
for the few who must now bear it. If it be true that health 
insurance would cost too much, then the social order is bank- 
rupt. It is even worse than bankrupt because it compels the 
weakest portion of society at the time they are weakest to bear 
the impossible burden which it is claimed can not be borne with- 
out serious disaster by society as a whole. Such arguments re- 
duce to absurdity. Health insurance means the redistribution of 
a burden which now falls unevenly. It does not cost money, 
it distributes cost already in existence, and it does it without 
doing harm, as has been shown in all countries, even our own, 
wherein we distribute certain burdens by means of social in- 
surance. The load of sickness is comparatively easy to carry 
when it is distributed over the whole body. The soldier who 
would attempt to carry his burden attached to his feet would 
not get very far ; even if he carried his burden in his two hands 
he would soon tire out. Distributed scientifically over his entire 
body, he carries it with comparative ease. We are carrying 
our sickness burdens around our feet. It is time that we dis- 
tribute them scientifically over the entire body. 

Opposition to Health Insurance 

The opposition to health insurance has made strange bed- 
fellows. The lions and the lambs are lying down together, but 
if I mistake not, the lambs will have to be renewed occasionally. 
The principal opposition comes from burial insurance compa- 
nies and from casualty insurance companies. It needs no par- 
ticular acumen to understand why. The fat sum of $100,000,000 
in expenses and profits annually on the part of burial insurance 
companies alone well accounts for their opposition. The sum 
of $40,000,000 of profits and cost of administration in the case 
of casualty companies might well be taken as an indication of 
the reason for their opposition. These organizations with 
money to spend, mostly the money of the policyholders, 



324 SELECTED ARTICLES 

have attempted to poison the minds of other organizations. 
They have organized associations with fictitious but high- 
sounding names and have subsidized others. They have 
flooded the country with literature, more than 75 per 
cent of which is false in its statement of simple facts. They 
have attempted to make the doctors believe that health insur- 
ance would ruin the profession, at the same time handing out 
honey phrases about sickness prevention, which, when analyzed, 
indicate that the same companies are attempting to lead the doc- 
tors to State medicine, wherein the doctor will become the em- 
ployee of the State in preference to the organized scheme of 
medical practice which would prevail under health insurance. 
These same forces have tried to lead the great fraternal move- 
ment in opposition to social health insurance by making them 
believe that fraternalism was doomed. As a matter of fact, not 
over 2 per cent of present losses from sickness are being carried 
by fraternal insurance orders. Surely, the great body of men 
whose inspiration is fraternalism would sacrifice, if sacrifices 
were necessary, the 2 per cent of sickness insurance which they 
now carry in favor of a social scheme which would take care 
of a large part of the rest. 



GROUP INSURANCE 1 

One of the newer forms of industrial service work is group 
insurance. Originated seven years ago by a leading insurance 
company of New York, it has been adopted by a large number 
of other insurance companies and has been pushed vigorously 
by them among industrial organizations. There are today hun- 
dreds of group insurance policies in force in the United States 
and the total amount of insurance is very large. 

Group insurance is life insurance covering all or a certain 
portion of the employees of an industry, and provides that in 
case of death while in the employ or on the payroll of the com- 
pany that a certain indemnity shall be paid to the beneficiary 
designated. In the first policies issued the amount of insurance 
was equal to the yearly wage or salary of the employee, but now 
in most instances the amount of insurance is either $500 or 

1 By H. W. Kimball. Industrial Management. 57:154-6. February, 
1919. 



PROBLEMS OF LABOR 325 

$1,000. _ Very often arrangements are made for the insurance to 
increase from year to year until a certain specified maximum of 
insurance is reached, and thus length of service gives added 
benefits. Often the employees are divided into classes and the 
married men are insured for larger amounts than the unmarried 
men and women. Some employers arrange for the insurance 
to begin as soon as the employee is hired so that the prospective 
worker can be told "The moment you enter our employ you are 
insured for $500." Other companies provide that the employee 
must have worked three or six months before being eligible for 
insurance. By this method it is hoped that the new employee 
will be induced to stay. 

No Medical Examination 

One of the most important features of this group insurance 
is that no medical examination is required. The plant itself and 
the workers as a whole are inspected by the insurance company 
and if approved all the employees are accepted for insurance. 
Inasmuch as probably 15 per cent, of the employees of the aver- 
age plant would be rejected for regular insurance on medical 
grounds, group insurance enables an employer to offer insur- 
ance protection to a large number of his employees who other- 
wise could not obtain it. Many of the policies provide that the 
insurance money shall be paid in monthly installments of $50 
or $100, because coming in this way rather in a lump sum the 
money will more likely be used wisely by those receiving it. 
Disability clauses are included in the policy contract providing 
either that the insurance may be kept in force in case of total 
disability, or else that after one year of total disability the in- 
surance shall be paid in a certain number of annual installments. 
A certificate is issued to each person insured, explaining the de- 
tails of the insurance, and this certificate usually contains a pic- 
ture of the plan and a letter signed by some officer of the com- 
pany. 

Premium and Cost 

The kind of insurance issued under this group plan is known 
in insurance language as yearly renewable term. The premiums 
are figured on the attained age of each employee and the pre- 
miums are paid monthly on the basis of the number of persons 
actually insured that month. The premium cost for each indi- 
vidual increases year by year, but it is assumed that the total 



326 SELECTED ARTICLES 

yearly cost to the company will not vary much from year to 
year. There will be a change in the personnel, but as the older 
men are more likely to die and their places will be filled by em- 
ployees at younger ages the average age of the plant will not be 
likely to increase. The cost of this insurance is exceedingly low. 
The expense in an average plant will not exceed one per cent, of 
the amount of insurance per year, and some companies by large 
dividends have reduced the net cost so that per year for each 
$1000 of insurance it does not exceed $6 to $7. 

Arguments Used in Favor of the Plan 

There are five arguments advanced for group insurance : 

1. It reduces labor turnover. The man who knows that the 
company without cost to himself is providing life insurance 
protection for his family, will not only feel more kindly toward 
the company but will be less likely to leave its employ. How 
far this is true it is difficult to say. The influence upon the 
worker is psychological and very hard to weigh. The mere fact 
of the insurance will not keep any man who is dissatisfied from 
leaving. It will not hold him if a more lucrative job is offered 
elsewhere. But without doubt it helps to create a certain feeling 
of contentment and a sense of security so that the spirit of dis- 
content is not so easily awakened. Certainly the man will not 
be so likely to be looking elsewhere for work. Moreover, it has 
been found that where the wives and mothers of employees arc 
familiar with this group insurance they have realized its value 
even better than those who are insured, and have often used 
their influence for the continuous employment of their husbands 
and children. 

2. Group insurance establishes good will. The reputation 
of any company is one of its most valuable assets, and a reputa- 
tion among the workers for fair and liberal dealing is much to 
be desired. A company of whom it is said, "It looks after your 
family if you die" has done something to create a favorable 
atmosphere. By this insurance an employer says to his workers, 
"If, while you are in my employ you should be taken sick and 
die, I will see that for a certain number of months your pay 
envelop is continued to your family so that they will not be in 
want." As time goes on and these death benefits are paid 
throughout the community, this feature of employment will be 
talked over in the homes and a feeling of kindliness toward the 
company will result. But group insurance alone will not pro- 



PROBLEMS OF LABOR 3V 

duce good will. It cannot overcome any reputation which the 
company may have for shrewd and narrow dealing. If this is 
the feeling group insurance will be thought of as simply a sop 
thrown to the workers. But if the various activities of the 
company are all in the direction of justice and liberality then 
such insurance will be an added influence for good will. 

3. This form of insurance can be used as a reward for con- 
tinued service. A growing feature has been to start this insur- 
ance at a minimum amount of perhaps $250 or $300, and increase 
the amount of protection $100 each year until a maximum of 
$1000 is attained. In this way the longer a man is in the employ 
of the company the larger his insurance protection. If care is 
taken each year to notify the employee of this increase it has a 
good effect. A printed card or letter tactfully worded and 
signed by some official should call the attention of the worker 
to the increase. 

4. Group insurance affords a much needed protection for 
the families of workers. It is an altogether too common experi- 
ence to have some employee die and then to find that his family 
has been left almost destitute. Sometimes the company provides 
for the most immediate needs of the family; often a paper is 
passed through the department in which the employee worked 
and a sum of money is collected. But these methods of pro- 
viding for the time of need are make-shifts and carry the stamp 
of charity. Group insurance makes an adequate provision and 
is received not as charity but as a benefit which properly went 
with the man's job. 

5. Group insurance eliminates one argument for trades 
unionism. Organizers of trades unions often point to the death 
benefits which are paid by their organizations as a reason for 
membership. I know of a number of firms who have adopted 
group insurance so that they could tell their employees that it 
was not necessary for them to join any union in order to re- 
ceive insurance protection. 

Trades Unionism and Group Insurance 

In this connection it may be said that trades union sentiment 
on the whole has not been in favor of group insurance. Trade 
union papers have stated that so far as known it has not been 
introduced into union shops. At the present time this is not 
the fact, as within the last two or three years policies of group 
insurance have been issued for industries working under union 



328 SELECTED ARTICLES 

conditions. Ardent unionists regard this movement as a subsidy 
designed to keep the worker quiet and contented, and they feel 
that its cost is an amount withheld from wages. 

They have also argued that the insurance can at any time 
be discontinued by the employer, that such discontinuance can 
be used as a threat to keep the employee at work, and that if 
the insurance is discontinued the worker finds himself without 
an insurance protection which he had depended upon, and per- 
chance at his age unable to get insurance elsewhere. 

This last argument loses something of its force because now 
almost all group insurance policies provide that in the event of 
termination of employment an employee may without medical 
examination convert his group insurance into any form of in- 
surance issued by the insurance company. This policy is issued 
at the then current rates. This feature makes a good talking 
point and is very fair to the insured, but in actual practise its 
value is very limited. Few men on leaving will take the trouble 
to get in touch with the insurance company and take the steps 
necessary to keep the policy in force. 

Arguments Against Group Insurance 

The arguments against group insurance may be summarized 
as : 

i. It does not accomplish what is claimed for it. Investiga- 
tions in many instances have shown that it has been apparently 
valueless to hold the worker in face of the lure of a better job. 
Nor does group insurance cast out of a man that inherent rest- 
lessness which impels him every once in a while to shift his 
place of employment. Its effect upon labor turnover often ap- 
pears negligible. After a little men receive it as a matter of 
course, and do not have any more loyal feeling toward the com- 
pany because of it. 

2. The real value of this insurance protection is very small. 
As soon as a man's name is taken from the payroll his insurance 
ceases. With the drifting of workers from one industry to 
another, the man very often is taken sick while out of work or 
when he has not been long enough at his job to be entitled to 
insurance protection. The experience of the insurance compa- 
nies is that a large proportion of the death claims paid are the 
result of accident, suicides or sudden death from pneumonia 
or heart failure. Moreover, the worker who has some chronic 
disease of which he finally dies often leaves his work before he 



PROBLEMS OF LABOR 329 

is sick unto death. He just gets through, is dropped from the 
payroll of the company, and so loses his insurance protection. 

3. Group insurance is simply a form of paternalism. The 
company does for the worker something that he had rather do 
for himself. The attitude of many manufacturers after experi- 
menting with various forms of welfare work is that it is far 
better just to pay the best wages possible and leave the em- 
ployee to care for himself as he deems wise. This also is in 
general the point of view of the trade unionist. He wants the 
highest possible wage and freedom to provide for himself. He 
prefers to buy his own insurance. He fights shy of any insur- 
ance which binds him to the company. Paternalism is an out- 
grown form of relationship, and has been supplanted by inde- 
pendent bargaining. The next step in industry is not a return 
to paternalism but forward to some form of cooperation. 

4. The employer can carry this insurance more cheaply 
himself. The insurance companies would not undertake this 
business if it were not profitable. In fact to date it has been 
very profitable for them. A number of years ago a large con- 
cern took out insurance for its employees and paid a premium of 
about $8000 a } r ear. In two years there were two deaths with 
insurance of $1000 each. Some $3000 were paid back in divi- 
dends by the insuring company. This concern concluded that 
it could much more cheaply carry its own insurance, discon- 
tinued the policy contract, and since then has paid the death 
benefits itself. A large concern can doubtless do this and save 
money. If a sinking fund is established and each month the 
amount that would have been paid to the insurance company 
is placed in that fund any concern over a period of years would 
doubtless find that the insurance cost had been lessened. 

There are two arguments against such self insurance : 

1. There is always a certain chance, small indeed, yet real, 
that some catastrophe or epidemic may cause so large a number 
of death claims. Insurance is based on the law of averages, and 
the insurance companies carrying groups in many different sec- 
tions can easily meet a situation that would swamp any local 
concern. 

2. It is argued by the insurance companies that the workers 
will not have the same confidence in the insurance if it is car- 
ried by the company employing them as they will if the insur- 
ance is issued by a large insurance company with a national 
reputation. The force of this argument is largely dependent 



330 SELECTED ARTICLES 

upon the confidence or lack of confidence which the employees 
have in the company for whom they are working. The com- 
pany can cancel the insurance policy at any time, and an in- 
surance certificate issued by any well established organization 
would probably be as valuable so far as insurance protection is 
concerned as that issued by an insurance company. 

Selling Group Insurance to the Workers 

The art of selling group insurance to the employer has been 
carefully developed, but there is even more need, if group in- 
surance is to succeed, that it be sold effectively to the workers. 
A fact not clearly recognized is that the value of group insur- 
ance in any industry depends upon the thoroughness with which 
it is understood by those who benefit from it. Many manu- 
facturers have hastily adopted group insurance, given insurance 
certificates to the employees, and felt that they had done all that 
was necessary. But a large proportion of the employees prob- 
ably had very little idea of what they were receiving, and cer- 
tainly were not impressed with its value. Group insurance to 
be well worth while must be well advertised. One concern of 
which I know explained the plan in a series of leaflets placed 
in the pay envelopes, then group meetings of the employees 
were held and the plan was described more in detail. Questions 
were asked and answered. Every objection was fairly met. 
Certificates were then issued but the group plan was not allowed 
to drop out of sight. Through bulletins and through the plant 
paper its advantages and the stories of those who have benefited 
by it have been kept before the workers. In that factory group 
insurance has been understood and appreciated. 

Group Insurance and Mutual Benefit 

Perhaps one of the most satisfactory plans of conducting 
group insurance is that adopted in various plants of combining 
group insurance with a mutual benefit association. The em- 
ployee pays his dues as a member of the association and in this 
way provides for benefits to be paid him in case of sickness, and 
the company agrees to cover each member of the association 
with insurance protection. This is true cooperation. The em- 
ployer says to his employees, "You do something to protect 
yourself and we will meet you half way. Together we will see 
that you have adequate protection against both the hazards of 
sickness and of death." This plan has worked well wherever 



PROBLEMS OF LABOR 3V 

adopted. It makes the insurance something more than a gift. 
It links up the insurance with an organization of the employees, 
and keeps its benefits before them. 

Group insurance is growing in favor. Where adopted it has 
rarely discontinued. It affords valuable protection at a low cost 
and where clearly understood by the workers has created good 
will and has tended to accomplish the good claimed for it. 



SOCIAL INSURANCE IN THE UNITED 
STATES x 

Social insurance may be denned as mutual risk bearing from 
which the elements of competitive costs and private profits are 
excluded. Social insurance is not necessarily state insurance; 
any form of mutual non-competitive and non-profiteering in- 
surance is true social insurance. Accepting this definition, it is 
evident that insurance against property losses due to fire, flood, 
hail, lightning, etc., may be covered by social insurance as well 
as insurance against personal losses due to accident, illness, old 
age, invalidity unemployment, and death. In this country it 
is usual to refer to workmen's accident compensation as a form 
of social insurance. In fact, but very few of our states have 
provided in their compensation laws for community insurance 
against the losses due to accidents, and in but three or four 
states are the state accident funds so organized as to exclude 
the persistent and pernicious elements of competitive costs and 
private profits. Social insurance against property losses is much 
more in evidence in this country than social insurance against 
personal losses. The insurance of shipping instituted in the 
United Treasury Department at the outbreak of the great war 
is an instance of true social insurance. In this instance private, 
profiteering insurance was absolutely inadequate to cope with 
the situation. Insurance rates in the private companies were 
utterly prohibitive, so the United States government went into 
the insurance business and by reason of its virtual monopoly in 
this field was able to eliminate the costs of securing business by 
competitive advertising and agenting and to distribute losses of 
ships and cargoes over such a large number of ship owners and 
cargo owners that costs were brought down within reason. The 

1 By Royal Meeker. United States Commissioner of Labor Statistics. 
Proceedings, Conference of Social Work. Pittsburgh, 19 17. 



332 SELECTED ARTICLES 

results have been most beneficial, as otherwise shipping rates 
would have driven shipping from the seas more effectively than 
German raiders and submarines. 

The term social insurance as used today, however, always 
refers to insurance against personal hazards of workers or those 
in the lower income groups. In this sense there is almost no 
such thing as social insurance in the United States. By way 
of illustration, take the state of Pennsylvania which has a state 
insurance fund in which employers may insure against the risk 
of injuries to their workers from industrial accidents. The 
Pennsylvania state fund, however, cannot be correctly desig- 
nated as an example of true social insurance because, first, it 
does not provide for a true communal risk bearing, and, second, 
the element of private profits is not eliminated from the prem- 
ium rates. The risk is not carried as a community risk because 
the insurance business is still carried on as a competitive busi- 
ness in Pennsylvania. Instead of industrial accident risks being 
carried mutually either by the state, local communities or dif- 
ferent industries, we find the state dotted over with private, 
profit-seeking, intensely competitive insurance companies. Profit, 
not mutual apportionment of losses, is the underlying principle 
of all insurance undertaken as a private enterprise. In Pennsyl- 
vania it is necessary for the state fund to compete with private 
insurance companies in securing business, therefore the heavy 
overhead charges inevitable in private, profiteering, competitive 
insurance still persist. 

The socializing of insurance means eliminating competition 
and the consequent advertising expenses and other charges due 
to rivalry. Socializing insurance will bring about four great 
economies which will reduce enormously the present excessively 
high overhead charges which put any adequate insurance be- 
yond the reach of the ordinary workingman or working woman. 

(i) It will eliminate the expense of getting and keeping 
policy holders. The items of expense which rank casualty, 
health, and the socalled industrial insurance among the most ex- 
pensive luxuries offered for sale are the expense of writing 
new insurance and of renewing expired or lapsed policies. 

(2) It will eliminate the expense of collecting premiums, 
which in the case of casualty, health and industrial insurance 
means a very large proportion of the very high expenses for 
these kinds of insurance. 

(3) It will eliminate the expense and risk of properly in- 



PROBLEMS OF LABOR 333 

vesting the funds collected in premiums. The hazards of in- 
vestment are brought home to us in these precarious times when 
war conditions are playing ducks and drakes with investment 
values. 

(4) It will eliminate the expense of profits whether these 
profits go in dividends to shareholders or in unearned salaries 
to officials. 

All these items of expense will immediately disappear upon 
the establishment of true social insurance, and insurance instead 
of being a prohibitively expensive luxury will become what it 
should have been from the beginning a cheap necessity within 
the means of every person who needs it. 

The subject of social insurance is one of the most vital ques- 
tions confronting us at this time. Attempts have been made to 
minimize the importance of insurance and lay emphasis upon 
the prevention of accidents, disease, and death as of vastly 
greater importance than compensation insurance against these 
hazards. 

Our workmen's compensation commissions have, as I see it, 
three great functions to perform: 

(1) To prevent all preventable accidents; 

(2) To cure all curable injuries; 

(3) To compensate all compensatable disabilities. 

It will be admitted without discussion that it is immensely 
more important to prevent a workman from getting his hands 
crushed in the calendar rolls in a rubber mill, than it is to give 
him surgical and hospital treatment to restore as fully and as 
quickly as possible the use of his maimed members. But not 
all accidents can be prevented. It is axiomatic that the surgical 
and hospital treatment needed to transform a total permanent 
disability into a partial permanent disability is immensely more 
important to the injured worker and to society than the doling 
out of compensation payments. All experience shows that 
money expended in restorative treatment of disabled men and 
women is the best kind of good economy. Yet the sums the 
commissions may expend for medical, surgical, and hospital 
treatment range from nothing in Washington and Wyoming, 
$25 to $75 in Pennsylvania, up to $300 for special cases in West 
Virginia. Nine states and Porto Rico have no specific limit on 
expenses for restorative treatment, but one of these states, 
Texas, limits the time of such treatment to one week, and Okla- 
homa allows only 15 days' treatment. 



334 SELECTED ARTICLES 

Although adjusting and awarding compensations are much 
less important than the first two functions named, this third 
function is by no means unimportant. Indeed, the compulsory 
payment of compensation for industrial accidents is the only 
thing that brought home to employers the fact that accidents 
are the worst form of extravagance; that every accident costs 
money; that a high accident rate connotes inefficiency in shop 
management; that most industrial accidents are not providential 
and predestined, but, on the contrary, are preventable; and that 
a failure to prevent preventable accidents is inhuman as well 
as costly. 

We are beginning to realize that accidental injuries are not 
fore-ordained from the foundation of the earth. We have not 
yet begun to think in this way about illness or even about acci- 
dents other than industrial accidents. I feel very strongly that 
the workmen's compensation laws should be extended in scope 
immediately to include all occupational illness, and, as soon as 
public sentiment can be educated, to include all accidents 
whether in the course of industry or not. It makes no differ- 
ence to an injured man and his family whether his leg is burned 
off by molten metal in a foundry or whether it is cut off by a 
trolley car in the street. The incapacity he suffers is the same 
in either case. The payment of compensation for incapacities 
suffered through street accidents will add considerably to the 
amounts paid in compensation, but it will not add to the accident 
burden. On the contrary, it will lighten this burden which 
now falls with crushing weight upon the victims of non-in- 
dustrial accidents and their families, by distributing their bur- 
dens more equitably and by directing attention to the fact that 
the burden exists. One of the most peculiar and exasperating 
psychological phenomena to be found anywhere is that pseudo- 
economic notion that accidents and illness cost nothing as long 
as the state makes no provision to pay anything to the victims or 
their dependents. So long as we collectively and persistently 
keep our eyes and minds closed, accidents and sickness have no 
existence for us. Compensation laws did not create industrial 
accidents. They merely provided a more equable distribution 
of that burden which theretofore was being carried by relatives 
and friends of the victims and by the poor-houses and other 
charitable institutions, on the part of the public. As soon as 
employers were obliged to bear some part of the burden of in- 
dustrial accidents, they became much interested in Safety First, 



PROBLEMS OF LABOR 335 

with the result that accident rates, if not absolutely lower than 
formerly are doubtless much lower than they would now be 
had there been no compensation laws enacted. 

Our compensation laws must be simplified and strengthened 
in their administrative features as well as extended in scope 
if they are to accomplish what we have a right to expect of 
them. The administration of our compensation laws is now too 
much taken up with the relatively unimportant business of 
merely handing out compensation doles to injured workmen. 
Our industrial boards and commissons are doing all too little 
in the way of preventing accidents and are doing almost nothing 
in the way of medical, surgical, and hospital treatment to re- 
store injured workers to industry as quickly and completely as 
possible. This failure on the part of our compensation admin- 
istration is due to man}' causes. The most important cause is 
lack of understanding by our state legislatures and the conse- 
quent paucity of appropriations to enable the boards and com- 
missions to do the work they ought to do in the way of accident 
prevention and medical, surgical, and restorative treatment. 

Accident boards and commissions are made up for the most 
part of men untrained in the traditions and practices of the legal 
profession. If hearings before these bodies are to be conducted 
by cheap lawyers in an atmosphere of tawdry legal profundity, 
the results are bound to be disastrous. The foolish, time-con- 
suming questions asked by self-seeking lawyers of equally self- 
seeking physicians invariably arouse the ire of the layman, un- 
trained and unaccustomed to the intricacies of legal quibbling 
and the dignity of the "law's delays/' As a consequence, an 
extremely irritated board may be exasperated into doing grave 
injustice to one or both parties in a case. 

The only cure for this serious condition which threatens to 
break down the effectiveness of compensation legislation is to 
socialize our workmen's compensation laws. By that I mean 
the absolute exclusion of casualty insurance companies from 
the writing of risks under the workmen's compensation laws. 
The making of private profits out of the misfortunes of the 
workers is intolerable. It was a costly and inexcusable blunder 
to have allowed the casualty companies to make use of the com- 
pensation laws for the purpose of exploiting the injured work- 
men for profit. The way to remedy this blunder is to remedy 
it. All stock insurance companies should be excluded at the 
earliest possible moment from writing workmen's compensation 



336 SELECTED ARTICLES 

insurance. All incentive for meddling in the administration of 
workmen's compensation laws should be taken away from insur- 
ance companies. 

The next logical step after the revamping and extension of 
our workmen's compensation laws would be the enactment of 
invalidity and old age insurance legislation. If a practical way 
can be found, I should favor contributory insurance to cover 
these hazards. However, I regard the payment by the worker 
in whole or in part, for insurance against invalidity and old age 
as a mere detail. It makes little difference in the results 
whether the workers pay or the state pays, as is demonstrated 
by the operation of the British non-contributory Old Age Pen- 
sion Act. Administration is greatly simplified and rendered 
cheaper if insurance premiums are assessed on the different 
industries or the community as a whole. 

For some time past attention has been centered upon health 
insurance almost to the exclusion of all other forms of social 
or pseudo-social insurance. In fact, the term social insurance 
has been perverted in the minds of many to mean merely health 
insurance. As was to be expected, some of the most powerful 
insurance companies have professed a profound friendliness for 
the general principle of health insurance at the same time that 
they have strenuously fought any practical program for the 
establishment of a health insurance system. 

Many curious arguments have been urged against health in- 
surance. It is stated, on the one hand, that illness is relatively 
negligible in this country and, on the other hand, that it is so 
widespread that any insurance scheme would necessarily break 
down because of the enormous expense involved. On the third 
hand, it is stated that we know nothing about how much illness 
there is in this country — whether there be much or little. It is 
also argued that illness has none of the disastrous consequences 
in this country which obtain in the poorer and more populous 
European countries. It is asserted that the working people have 
incomes sufficient to enable them to hire physicians to care for 
themselves and their families; that a job always awaits the 
worker upon his recovery from illness. The experience of social 
workers certainly does not confirm these allegations. Illness is 
all too frequent in this country and is fraught with most serious- 
ness consequences. Until after the outbreak of the great war 
unemployment had been the greatest curse of the workers of the 
country. Even today in the face of what is commonly denomi- 



PROBLEMS OF LABOR 337 

uated by employers as a terrific dearth of labor, men are still 
being scrapped at the age of 40, while in European countries 
men continue in active employment well beyond the age of 60. 
Even if it is now true that workers who do not have too many 
white hairs may readily find employment, that has nothing to 
do with the question of providing adequate medical, surgical, 
and hospital treatment for the worker when he is ill and the 
payment of money benefits in order to sustain his family in 
something akin to decency during the period of his illness. 

It is alleged that voluntary methods are providing adequately 
for working people. It is asserted confidently that nothing is 
known about the extent and the adequacy of voluntary benefit 
funds of trade unions, establishments, and mutual associations. 
It is a sufficient answer to this allegation to call attention to the 
23rd Annual Report of the United States Commissioner of 
Labor, in which are given the results of a very complete study 
of these voluntary sickness benefit funds. The conditions as 
shown in the 23rd Annual Report of the Commissioner of Labor 
Statistics have not materially changed. None of the trade union 
sick benefit funds provides for medical, surgical, and hospital 
treatment. Only a very few provide sanatoria and homes for 
the aged and disabled. All the voluntary agencies combined 
make quite inadequate provision for only a small minority of 
workers and they the least needy of them all. 

Under the voluntary system, if it be lawful to call such chaos 
a system, the people who are in most need of sickness and other 
insurance do not get it at all and only those who are best situ- 
ated economically are able to purchase insurance. 

If I believed that social health insurance was merely a system 
for dealing out doles in relief to the families and dependents of 
sick workmen, I would have very little enthusiasm for it. It 
is because I know that health insurance will call attention to the 
costliness of illness that I am in favor of universal compulsory 
health insurance. It took compulsory workmen's accident com- 
pensation to bring home to the employers the fact that every 
accident costs money whether it is compensated for or not. We 
have already realized in part at least that accidents are terribly 
expensive; that the expensiveness of accidents did not begin with 
the enactment of compensation laws, but that some one must 
inevitably pay the piper. Before compulsory accident compensa- 
tion laws were enacted the burden fell upon the workers almost 
entirely because the workers were least able to bear the burden 



338 SELECTED ARTICLES 

and were, therefore, unable to escape bearing it. What is true of 
disabilities from accidents is true' of disabilities from illness. 
Health insurance legislation can neither increase nor decrease the 
burdens due to illness, except as such legislation increases or de- 
creases the amount of lost time due to illness. One effect of 
compulsory health insurance will be to remind employers very 
forcibly that sickness is uneconomical, wasteful; that sickness 
costs real money to the employer and the public; and that much 
existing illness is either preventable or curable. 

A favorite argument against all social insurance is that it is 
socialism. This strikes me as being the most telling argument 
for socialism that could be uttered. Instead of condemning so- 
cial insurance, it highly commends socialism. I do not happen 
to be a socialist, but if it is socialism to provide adequate pro- 
tection to the lives, health, and well-being of our working popu- 
lation, then let us have some more of the same. 

Another stock objection to social insurance is the incompe- 
tence of public officials which leads to extravagance in admin- 
istration. There is unfortunately much truth in this allegation. 
However, no trustworthy data as to the cost of state insurance 
as compared with private insurance have ever been worked out. 
From such data as exist, however, it appears that the premium 
rates under true social insurance could be increased 50 per cent, 
because of incompetence and extravagance in administration and 
yet leave a margin in favor of social insurance as compared 
with private, competitive, profiteering insurance. If the public 
are willing to trust themselves to conduct insurance econom- 
ically, efficiently and honestly, they can still secure the benefits 
of social insurance by establishing mutual associations for the 
administration of the funds. A genuine mutual association has 
practically all the advantages of state conducted insurance men- 
tioned above and it is free to conduct its affairs so as to secure 
the greatest efficiency. 



HOUSING 

HOUSING AND TRANSPORTATION 

PROBLEMS IN RELATION TO 

LABOR PLACEMENT 1 

The broad outlines of the question dealt with by this paper 
may be stated briefly. The details would fill volumes, and but 
little has yet been assembled in useable form. Labor placement, 
wc shall assume, includes labor retention, i.e., not only the se- 
curing of a supply of labor but what is more important, the 
reducing of its turnover. The latter part of the question has 
been under scrutiny for some time and many obvious reasons 
for our great labor turnover have been noted and some have 
been changed. As in infant mortality, even a superficial study 
brought to light certain conditions that a minimum of group 
or community action could change — as the substitution of clean 
and modified milk for the dirty, diluted stuff that had been sold 
before — and which being changed caused an immediate and 
notable improvement. 

So easy and so efficacious, comparatively, are these first 
changes that some of us have been inclined to persuade our- 
selves that they comprise our whole task. An alley that has 
been buried under an accumulation of filth is vastly improved 
by shovel work, but it is not really clean until broom and water 
have played their part. So improvements within the plant, 
whether of physical conditions or of management, will make 
notable improvement in labor turnover and at a comparatively 
small expenditure of thought and energy, for they require but 
a minimum of community or group action. 

But having achieved so much we find that the task is not 
completed. A generation ago our present condition, in our 
more progressive industrial enterprises at least, would have 
seemed almost Utopian. But having done so much we find that 
labor turnover is not yet reduced to the place where it should 
be and dimly we are beginning to see that labor turnover is a 

1 By John Ihlder. Annals of the American Academy. 8i:si-<; 
January, 19 19. 



340 SELECTED ARTICLES 

matter of concern not only to individual employers but to those 
who are concerned with such community problems as deserting 
husbands ; and that conversely the employer has reason to be 
concerned, because of his interest in the efficiency of his own 
plant, in these community problems. The deserting husband 
not only leaves destitute wife and children for the community 
to support but he loses the spirit which makes a first class work- 
man and by degrees becomes a drifter, a vagrant, one of the 
army of unemployables the attempt to employ whom is one of 
the great wastes of industry. And the reason for desertion in 
the great majority of cases probably lies quite outside the fac- 
tory gates and only the effect is felt inside. 

Had that man lived in a better home, in a better neighbor- 
hood, had his children attended better schools, had his neigh- 
bors been more satisfied with their lot, had more to lose and so 
have had a different tone in their daily conversation, the deserter 
would probably have resisted the temptation to which he yielded, 
perhaps a little thing in itself, but the last of many things big 
and little, — impatience at the jam in an overcrowded street car 
to which he was subjected morning and evening, or, of more 
consequence, remorse that the cost of sociability at the corner 
saloon made impossible the paying of grocer's bills. These can- 
not be affected by improvement within the plant; they can be 
affected only by improvement of living conditions, and the latter 
may be summarized as improvement of the dwelling. 

But here again it is necessar}' for us to broaden our vision 
from the individual to the community. Housing betterment 
began by attempts to improve individual houses, and it made 
considerable improvement. It did the shovel work — or at least 
began it — of somewhat lessening the squalor and filth of slum 
areas. Transportation began toe by accepting existing condi- 
tions and seeking only to mitigate them by enabling those who 
had the time and the money to escape to a better environment. 
But having done the shovel work where it has been done, we 
learned that it was after all but superficial, that it must be done 
over and over again, for it makes no change in the basic con- 
ditions which first rendered it necessary. Instead of improved 
slums, instead of expensive and wasteful means of escape, we 
begin to realize that there will be economy in abolishing slums, 
in using transportation not to mitigate the effects of bad condi- 
tions but to serve the community as a community. Transporta- 
tion, even the least expensive forms, is wasteful if used need- 



PROBLEMS OF LABOR 341 

lessly, wasteful in time, health, money. The more expensive 
forms, especially the most expensive form, the subway, is ruin- 
ous if used as a substitute for walking or even for trolleys. 

So both housing and transportation lead us inevitably to city 
planning, and city planning is based upon two things : first, the 
needs of business and industry, which create the city; second, 
upon the needs of the home, which make the city worth creating. 
Having come then to visualize the - city as an entity, not as a 
mere aggregation of individuals, we are able to consider the 
proper distribution of its parts and to plan for their needs. 

Business and industry must first be considered because from 
them flows the wealth upon which all else depends. Those 
areas best suited to their needs should be devoted to them. 
Transportation, here including not only passenger but goods 
transportation, must be planned to serve them primarily. But, 
though they are considered first, they cannot be considered ex- 
clusively; the satisfying of their needs may have to be modi- 
fied if it takes too much from satisfying the living needs of 
those for whose benefit business and industry exist. 

The living needs of the people may come second in order of 
consideraion, but not in importance. These living needs funda- 
mentally are first, a wholesome environment, which means not 
only a sanitary dwelling — to that point we have already pro- 
gressed in some of our cities — but space for outdoor life, op- 
portunity for education and recreation, amenities that promoted 
sense of community well-being and second, accessibility to the 
places of employment which support all this. That is, our 
places of employment must be distributed in such a way that 
their business needs may be most economically met and at the 
same time that they may be accessible to those who operate 
them. 

Philadelphia, by happenstance, for it was only a matter of 
happening, not of conscious planning, illustrates in a rough and 
unordered way what in the future we shall do in a systematic 
way. Its industries are distributed in many centers and as a 
consequence its workers in unusually large proportion can live 
within walking distance of their work. As further consequences 
its workers in very unusually large proportion live in single 
family houses, and its transportation system has lagged behind 
those of competitor cities in mechanical development. Had 
Philadelphia, instead of drifting along from a fortuitously good 
start, been consciously planned and developed according to ideas 



342 SELECTED , ARTICLES 

only now coming into vogue, it would today be a model for 
other cities to imitate. The fundamentals are there, though long 
unrecognized; the failure has come in working out details. Now 
that the fundamentals are being recognized, though not always 
clearly, and now that the tide is running strong toward com- 
munity development and control, Philadelphia has the best op- 
portunity of any of our largest cities to develop its housing and 
its transportation in such a way as to attract labor and to reduce 
labor turnover. 

In its new and rapidly growing industrial areas outside the 
present city it can develop a transportation system designed to 
meet real needs, not those due to mal-adjustment, and conse- 
quently a productive system, not a wasteful one. In these areas 
there is still space to develop the kind of housing that will make 
the worker glad to come and loath to leave. And while it is 
doing this it may, if the tide runs strong enough or if its lead- 
ing citizens swim hard enough, gradually correct the worst 
faults of its present housing-land overcrowding and insanitary 
conditions, and modify its plans for transportation so that they 
will not only bring it increased business from outside, but will 
make passenger transit within its borders efficient and econom- 
ical — high-speed trunk lines connecting important centers and 
fed by less expensive local lines. For passenger transportation 
within a city should be only for those who must travel long 
distances, and the number who must travel long distances daily 
should be reduced to a minimum by building as large a propor- 
tion as possible of houses within walking distance of places of 
employment. 



LABOR'S ATTITUDE ON HOUSING 1 

Great progress has been made in recent years in promoting 
safety and sanitation in manufacturing, mining, and transpor- 
tation. The progress has been most rapid in safeguarding work- 
ers from industrial accidents. This progress has been the result 
of continual agitation and education but has proceeded most 
rapidly and satisfactorily since the enactment of the Workmen's 
Compensation Laws, which render unsafe working conditions 
expensive to the employer. 

1 By Matthew Woll, Vice-Pres. American Federation of Labor. From 
an address before the Seventh National Conferenc on Housing, Boston. 
November 25-27. 1918. 



PROBLEMS OF LABOR 343 

The advance of sanitation in workshops has been less rapid. 
The dangers from bad sanitation are not only less obvious, but 
there is no liability for disease or death occurring as a result 
of improper sanitation. Future progress in sanitation demands 
not only cleanliness and ventilation but consideration must like- 
wise be given to occupational diseases. 

Still less progress has been made in promoting safe, sanitary, 
and comfortable houses for the workers. Little progress has 
been made in this direction because there has been a total lack 
of responsibility and no liability whatever for injury or ill-health 
caused to the workers or their families. Until recent years there 
has been indeed little, if any, community interest aroused in 
the housing problem of the workers. Squalor and almost un- 
livable conditions are still found in many homes of the workers 
whose compensation is inadequate and where the opportunity of 
the worker to associate with his fellow workmen for their in- 
dustrial improvement is persistently and successfully denied. 

One of the outstanding and most grievous features prevail- 
ing amongst these unorganized workers is the practice of hav- 
ing small children look after themselves while their parents are 
at work. The homes of these poorer workers in the main are 
heated by stoves, making it very easy for the children to seri- 
ously burn themselves or start a destructive blaze. In many 
cases these homes consist of dark, unsanitary, pest-ridden rooms 
and foodless kitchens. There can be no disagreement in the 
conclusion that such housing and conditions of homes should 
not be permitted to exist. 

The past provisions for the housing of workmen have been 
generally bad, not alone in the larger cities, but in industrial 
communities of every size, and in rural districts as well. The 
importance of good sanitary standards is becoming generally 
recognized. The growing demand for sanitation in the home, 
as well as in the shop, and adequate and fit houses for the 
workers to live in, is the result of years of agitation and insis- 
tence on the part of the organized workers of our country. 
This development is due principally because of the organized 
workers' demand for adequate wages and their pronouncement 
that the well-being of the community requires as -good sanitary 
conditions for the wage earner and his family as for the fami- 
lies of those of a higher economic status. 

The noticeably increasing public demand for the observance 
of proper sanitary standards in the building of new homes has 



344 SELECTED ARTICLES 

created a new phase to the problem and makes more difficult its 
solution when applied to the old houses in the poorer districts 
of our large cities and industrial centers. Houses in these dis- 
tricts never had sanitary utilities and conveniences. Because 
they are centrally located they are usually rented as long as they 
are at all habitable and not condemned by health boards. The 
immigrant worker is not so particular. The unorganized toiler 
has little choice. His economic condition determines his mode 
of life and standard of habitation. He can consider only prox- 
imity to his workshop without extra cost of travel to and from 
his work. Long hours of toil do not permit him to live any 
great distance from the shop. 

The owners of these properties are well aware of these dis- 
advantageous economic conditions of the workers, and logically 
reason, "why should we therefore remodel or refit the old build- 
ings, and lose that income which these improvements will en- 
tail?" Because there is not the same language in use, among 
these foreign workers, with a multiplicity of foreign customs 
and practices and a lack of trade organization, many of these 
workers are comparatively indifferent and generally extremely 
weak against strong groups who have financial interests in the 
properties and who do not hesitate to commercialize every eco- 
nomic disadvantage of these workers. The problem of housing 
in these old districts, is, therefore, distinctively the most essen- 
tial yet most difficult problem to solve. 

The demand of the wage earners is not only for sanitary and 
fit houses to live in, but the workers are also insistent that a 
sufficient number of houses shall be available so that they may 
be freed from the evils of high rents, over-crowding, and con- 
gestion. Such conditions of housing make not only for discom- 
fort and unhappiness but promote disease and degeneration. 

The ordinary method of supplying houses throughout their 
erection by private capital for investment and speculation has 
rarely, if ever, been adequate. Nearly all of our cities are 
built upon a system of exploitation. Most houses built for the 
wage earners are built to sell. They are built shoddily and 
only as good as they must be in direct proportion to the build- 
ing laws and municipal supervision. It has not been a question 
of building well, but of building profitably. Usually, and quite 
generally, banking and loaning institutions are in league with 
the owners of building projects, and later turn over their joint 
projects to other innocent persons to be squeezed by them in 



PROBLEMS OF LABOR 345 

order that a handsome income may be secured to both interests 
concerned. This system of exploitation does not permit of 
proper housing facilities and adequate upkeep. It demands only 
incomes and discourages expenditures, thus, in a short time the 
houses become bad, until a few years thereafter the Boards of 
Health order the premises vacated, unless political prestige or 
industrial influence suffices to prevent the continuation of a most 
abhorrent condition of housing. ■ 

The tenement house acts, as well as the health ordinances 
and building regulations of municipalities, while generally pro- 
ductive of good effect, are at best surface remedies and can 
never cure the evil of our present housing situation. A careful 
analysis of the results of the private housing situation for the 
past twenty-five years demonstrates conclusively the inadequacy 
of our procedure. In practically no instance have social ideals 
or economic justice been given more than a superficial consider- 
ation. In small manufacturing communities the number of all 
of the inhabitants owning their own homes is less than 15%. 
With this percentage in small manufacturing centers what may 
we expect in larger manufacturing cities where land and build- 
ing costs are much higher. 

A further study leads to the remarkable finding that a very 
large proportion of homes owned by these workers are en- 
cumbered with long-time obligations which tend to keep the 
operatives in a state of complete dependency, making it easy 
to repress their economic rights and force them involuntarily 
to become mere cogs in the adjacent factory organization. 
Under these conditions the wage earner is less likely to strike 
or leave his employment in order to retain his immediate, 
though meager saving and investment. He is led often to for- 
feit his opportunity for future improvement by forfeiting his 
right of association and of collective bargaining. 

Excellent plans for the housing of workmen have been put 
into effect by a number of firms and corporations, but such 
measures have little, if at all, affected the general situation. On 
the contrary, the employers' interests are primarily in the eco- 
nomic advantage which a closer labor supply affords. Indeed 
the early and still existing practice in some localities of factory- 
owned dwellings was, and is yet, an immense advantage to em- 
ployers in times of strikes and other labor disturbances when 
the power of eviction can be invoked, or at least threatened to 
good advantage in the employer's behalf. 



346 SELECTED ARTICLES 

Aside from the well-to-do manufacturer or corporation en- 
gaging in the present system of housing the workers, we have 
also the speculator in real estate to consider. While the im- 
provement and social welfare of the wage earner have been of 
secondary importance to employers, the welfare of the wage 
earner and an improved community spirit are totally lacking 
in the motives which prompt the real estate speculator. He is 
invariably prompted by selfish interests and has scarcely ever 
been concerned beyond the immediate prospects of profit. As 
a matter of fact he has been confined mainly to the limited num- 
ber of better paid workmen because he has found that the ex- 
ploiting of low and under-paid wage earners is not a profitable 
field for him. 

It may be well asked if the low and under-paid employees 
in factories are being housed at all, or if they are only boarding, 
rooming, or crowding. It is difficult to conceive how the worker 
with a very low income and large family can rent habitable 
houses, much less approximate those sanitary utilities which our 
present knowledge of health demands. It might, therefore, be 
apparent that our present practices and policies — or lack of poli- 
cies — for improved housing of the workers have been unjust 
and due principally to disastrous economic conditions of the 
workers. 

The solution of the problem first of all demands that every 
wage earner shall be afforded the opportunity of employment 
and an income and sustenance to enable him, without the labor 
of mother and children, to maintain himself and family in health 
and comfort and to provide a competence for old age with ample 
provision for recreation and good citizenship. 

To attain this condition the worker must be guaranteed and 
encouraged in the exercise of his right to organize and associ- 
ate with his fellow workmen in trade unions and to deal col- 
lectively with employers through such representatives of their 
unions as they may choose, for their improved economic and 
industrial conditions and relations. 

Realizing that ownership of a home, free from the grasp of 
exploiting and speculative interest, will make for a more effi- 
cient worker, a more contented and happy family, and a better 
citizen, the Government should interest itself in the following 
program : 

a. Prepare and inaugurate a plan to build model homes 
for the wage earners. 



PROBLEMS OF LABOR 347 

b. Establish a system of credits whereby the workers 
may borrow money for a long term of years at a low 
rate of interest to build their own homes. 

c. Encourage, protect, and extend credit to voluntary, 
non-profit making housing and joint-tenancy associa- 
tions. 

d. Exempt from taxation and grant other subsidies for 
houses constructed for occupancy of their owners. 

e. Relieve municipalities from the restrictions prevent- 
ing them from undertaking proper housing plans and 
engaging in other necessary enterprises relating to the 
workers' welfare and fitting habitation. 

/. Encourage and support the erection and maintenance 
of houses where the workers may find lodging and 
nourishing food during the periods of unemployment. 

We should no longer hesitate in forcing unused lands into 
use by exempting all improvements from taxation and by plac- 
ing a tax on non-productive the same as on productive land. 

Legislation should therefore be devised for the purpose of 
preventing the holding of land out of use and to secure for the 
Government, if not all, at least a part of the unearned incre- 
ment of land. 

In dealing with this question individually, the existing con- 
ditions present problems which seem almost hopeless of solu- 
tion, but we are fast getting beyond the individual point of view 
to the development of collective planning and rebuilding. In 
that development alone lies our main hope. 

There is developing very rapidly a public demand that every 
worker shall be provided with a decent, fitting, sanitary, and 
comfortable home. The wage earners of America are deserv- 
ing of this new conception of life and living and are entitled to 
no less. 

This, then, is the inspiration, the motive, and one of the 
ultimate objects of the American Federation of Labor. 



METHODS OF PROMOTING 
INDUSTRIAL PEACE 

THE PRESIDENT'S INDUSTRIAL 
CONFERENCE 1 

Labor Proposals 
Secretary Wilson's Plan 

Resolution offered by the secretary of labor, William W. 
Wilson, October 9, based to a degree upon the working scheme 
of the War Labor Policies Board. 

Resolved, that there shall be created a board of equal number 
of employers and employees in each of the principal industries 
and a board to deal with miscellaneous industries not having a 
separate board. The representatives of labor on such boards 
shall be selected in such manner as the workmen in the industry 
may determine. The representatives of the employers shall be 
selected in such manner as the employers in the industry may 
determine. 

Whenever any dispute arises in any plant or series of plants 
that cannot be adjusted locally the question or questions in 
dispute shall be referred to the board created for that industry 
for adjustment. The board shall also take jurisdiction when- 
ever in the judgment of one-half of its members a strike or 
lockout is imminent. Decisions of the board on questions of 
wages, hours of labor, or working conditions must be arrived 
at by unanimous vote. If the board shall fail to come to a 
unanimous determination of any such question, the question 
in dispute shall be referred to a general board appointed by the 
President of the United States in the following manner: 

One-third of the number to be appointed in agreement with 
the organization or organizations of employers most representa- 

1 The President of the United States, in October 1019 called a con- 
ference of interests representing labor, capital and the' public to arrive 
at some method of eliminating industrial unrest. The conference broke 
up on the question of collective bargaining. The proposals offered are 
important as indicating the points of view they represent. — Ed. 



350 SELECTED ARTICLES 

rive of employers ; one-third of the number to be appointed in 
agreement with the organization or organizations of labor most 
representative of labor, one-third of the number to be appointed 
by the President direct. 

Any question in dispute submitted to the general board for 
adjudication shall be decided by the unanimous vote of the 
board. If the general board fails to arrive at a decision by 
unanimous vote, the question or questions at issue shall be sub- 
mitted to an umpire for determination. The umpire shall be 
selected by one of the two following processes : First, by unani- 
mous selection of the general board. Failing of such selection, 
then the umpire shall be drawn by lot from a standing list of 
twenty persons named by the President of the United States as 
competent umpires in labor disputes. 

In all disputes that may be pending locally, or before the in- 
dustrial board, or before the general board, or before the um- 
pire, the employers and employes shall each have the right to 
select counsel of their own choice to represent them in present- 
ing the matter in controversy. 

Whenever an agreement is reached locally, or by the unani- 
mous vote of the industrial board, or by the decision of the um- 
pire, the conclusion arrived at shall have all the force and effect 
of a trade agreement which employers and employes shall be 
morally bound to accept and abide by. 

It is understood that this plan would not interfere with any 
system of joint wage conference now in existence, unless or 
until the failure to agree in such a conference made a strike or 
lockout imminent. 

The A. F. of L. Platform 

Resolution offered by Samuel Gompers, president of the 
A. F. of L., with the assent of the labor group of which he is 
chairman. 

Resolved, this conference of representatives of the public, of 
the employers and business men and of labor, called by the 
President of the United States, hereby declares in favor of the 
following : 

i. The right of wage-earners to organize in trade and labor 
unions for the protection and promotion of their rights, inter- 
ests and welfare. 



PROBLEMS OF LABOR 35i 

2. The right of wage-earners to bargain collectively through 
trade and labor unions with employers regarding wages, hours 
of labor, and relations and conditions of employment. 

3. The right of wage-earners to be represented by repre- 
sentatives of their own choosing in negotiations and adjustments 
with employer in respect to wages, hours of labor, and relations 
and conditions of employment. 

4. The right of freedom of speech of the press and of as- 
semblage, all being responsible for their utterances and actions. 

5. The right of employers to organize into associations or 
groups to bargain collectively through their chosen representa- 
tives in respect to wages, hours of labor, and relations and con- 
ditions of employment. 

6. The hours of labor should not exceed eight hours per 
day. One day of rest in each week should be observed, pre- 
ferably Sunday. Half-holiday on Saturday should be en- 
couraged. 

Overtime beyond the established hours of labor should be 
discouraged, but when absolutely necessary should be paid for 
at a rate not less than time and one half time. 

7. The right of all wage-earners, skilled and unskilled, to 
a living wage is hereby declared, which minimum wage shall 
insure the workers and their families to live in health and com- 
fort in accord with the concepts and standards of American life. 

8. Women should receive the same pay as men for equal 
work performed. 

Women workers should not be permitted to perform tasks 
disproportionate to their physical strength or which tend to im- 
pair their potential motherhood and prevent the continuation of 
a nation of strong, healthy, sturdy and intelligent men and wo- 
men. 

9. The services of children less than sixteen years of age 
for private gain should be prohibited. 

10. To secure a greater share of consideration and coopera- 
tion to the workers in all matters affecting the industry in which 
they are engaged, to secure and assure continuously improved 
industrial relations between employers and workers and to safe- 
guard the rights and principles hereinbefore declared, as well 
as to advance conditions generally, a method should be pro- 
vided for the systematic review of industrial relations and con- 
ditions by those directly concerned in each industry. 



352 SELECTED ARTICLES 

The Dennison Resolutions 

Resolutions offered by Henry S. Dennison, president of the 
Dennison Manufacturing Co., Framingham, Mass., with the as- 
sent of the public group of which he is a member. 

Collective Bargaining 

Whereas a serious inequality of bargaining power between 
employers and employes always imperils industrial peace, 

And whereas equality of bargaining power requires both 
the right of collective bargaining upon the part of the employes 
and the right of the emplo3 r ers to deal directly with their em- 
ployes, 

Now, therefore, be it resolved that it is the opinion of this 
conference that (i) Employers should at all times recognize 
the right of their employes independently to organize for the 
purpose of collective bargaining and should always be ready 
to meet any groups of their employes either directly or through 
its representatives, and 

(2) Labor should recognize the right of the employers to 
deal with their employes directly, through freely elected shop 
committees or otherwise, as well as through trade unions. 

Shop Committees 

Resolved, whereas maximum production is only possible if 
the full interest of the workman is enlisted in his work, and 

Whereas a sound social policy demands that work shall be 
done under conditions which promote the self-respect of the 
workman and afford him a sense of worthwhile accomplish- 
ment in his work. 

Now therefore be it resolved, that it is the opinion of the 
conference that the emploj'ers and employes in every factory 
should unite in bringing about the development of committees 
freely elected by the employes (whether as a part of the trade 
union system or otherwise, but not in antagonism to trade 
unionism) for the joint consideration by these committees and 
the employers of such constructive matters as methods of en- 
listing workers' interest, and of improving efficiency of pro- 
duction, which are of mutual value to employers and employes. 



PROBLEMS OF LABOR 353 

The Employer's Platform 

Statement of principles which should govern the employment 
relation in industry, as submitted by the employer group to the 
in dustrial conference. 

Sound industrial development must have as its foundation 
productive efficiency, and high productive efficiency requires not 
only energy, loyalty and intelligence on the part of management 
and men but sincere cooperation in the employment relation 
based upon mutual confidence and sympathy. 

This is true of all producing industries, large and small, of 
the farming industry as well as the manufacturing. While there 
are differences between the different branches of industry which 
call for special application of the underlying principles, these 
principles are the same in all. 

Without efficiency in production, that is to say, without a 
large product economically produced, there will be no fund for 
the payment of adequate compensation for labor, management 
and capital, and high cost of living will inevitably continue. 
Moreover, without such efficiency it will be impossible for Amer- 
ican industry successfully to compete in foreign markets or with 
foreign competition in this country. The larger and more 
effective the production, the greater will be the return to all en- 
gaged in the industry, and the lower the cost of living. 

The requisite efficiency in production can not be secured un- 
less there is effective cooperation between employer and employe 
such as is only possible where, with a full understanding of each 
other's point of view, management and men meet upon a com- 
mon ground of principle and in a spirit of cooperation based 
upon good understanding and a recognition of what is fair and 
right between the two. Then only can there be that harmony 
which will insure the prosperity of those engaged in industry 
and of all the people. 

With full recognition of the vital importance of these condi- 
tions and with due realization of the great responsibility rest- 
ing upon management to secure their practical application in 
industrial affairs, we submit the following which we regard as 
fundamentally sound in the interest of industry, of those em- 
ployed or concerned in industry, and of the people as a whole. 

i. Production.. The industrial organization as a productive 
agency is an association of management, capital and labor, vol- 
untarily established for economic production through coopera- 



354 SELECTED ARTICLES 

tive effort. It is the function of management to coordinate and 
direct capital and labor for the joint benefit of all parties con- 
cerned and in the interest of the consumer and of the com- 
munity. No employment relation can be satisfactory or fulfill 
its functions for the common good, which does not encourage 
and require management and men to recognize a joint as well 
as an individual obligation to improve and increase the quantity 
and quality of production to as great an extent as possible, 
consistent with the health and well-being of the workers. 

There should be no intentional restriction of productive ef- 
fort or output by either the employer or the employe to create 
an artificial scarcity of the product or of labor in order to in- 
crease prices or wages ; nor should there be any waste of the 
productive capacity of industry through the employment of un- 
necessary labor or inefficient management. 

It is the duty of management on the farms and in industry 
and commerce, as far as possible, to procure the capital neces- 
sary for the increased production that is required, and of both 
management and labor to cooperate to promote the use of cap- 
ital in the most efficient fashion. 

2. The Establishment as a Productive Unit. Recognizing 
the cooperative relationship between management and men es- 
sential to productive efficiency as a pre-requisite for national and 
individual well-being, the establishment rather than the industry 
as a whole or any branch of it should, as far as practicable, be 
considered as the unit of production and of mutual interest on 
the part of the employer and the employe. Here by experi- 
mentation and adaptation should be worked out and set up 
satisfactory means for cooperative relations in the operation of 
the establishment, with due regard to local factors. 

Each establishment should develop contact and full oppor- 
tunity for interchange of view between men and management 
through individual or collective dealing or a combination of 
both, or by some other effective method, always predicated on 
both sides on honesty of purpose, fairness of attitude and due 
recognition of the joint interest and obligation in the common 
enterprise in which they are engaged. Machinery is not enough 
for this purpose. There must also be sympathy and good will, 
with earnest intent that whatever the means employed they must 
be effective. 

3- Conditions of Work. It is the duty of management to 



PROBLEMS OF LABOR 355 

make certain that the conditions under which work is carried 
on are as safe and as satisfactory to the workers as the nature 
of the business reasonably permits. Every effort should be 
made to maintain steady employment of the workers both on 
their account and to increase efficiency. Each establishment 
should study carefully the causes of unemployment, and indi- 
vidually and in cooperation with other establishments in the 
same and other industries should endeavor to determine and 
to maintain conditions and business methods which will result 
in the greatest possible stability in the employment relation. 

4. Wages. While the law of supply and demand must in- 
evitably play a large part in determining the wages in any in- 
dustry or in any establishment at any particular time, other con- 
ditions must be taken into account, such as the efficiency of the 
worker and the wage standard of the industry in the locality. 
The wage should be so adjusted as to promote the maximum 
incentive consistent with health and well-being and the full 
exercise of individual skill and effort. Moreover, the business in 
each establishment and generally in industry should be so con- 
ducted that the worker should receive a wage sufficient to main- 
tain him and his family at a standard of living that should be 
satisfactory to a right-minded man in view of the prevailing 
cost of living, which should fairly recognize the quantity and 
quality of his productive effort and the value and length of his 
service, and reflect a participation on his part in the prosperity 
of the enterprise to which he is devoting his energy. 

Many plans are now under consideration for adding to the 
fixed wage of the worker such, for example, as bonus pay- 
ments, profit-sharing and stock ownership. All such plans 
should be carefully studied in each establishment. It may well 
be that in many instances the employer and the employe could 
work out an arrangement of such a character to their mutual 
advantage. 

In order that the worker may in his own and general interest 
develop his full earning capacity and command his maximum 
wage it should be a primary concern of management to assist 
him to secure employment suited to his abilities, to furnish him 
incentive and opportunity for improvement, to provide proper 
safeguards for his health and safety, and to aid him to increase 
the value of his productive effort. 

Where women are doing work equal with that of men under 



356 SELECTED ARTICLES 

the same conditions, they should receive the same rates of pay 
as men and should be accorded the same opportunities for train- 
ing and advancement. 

5. Hours of Work. Hours of work schedules should be 
fixed at the point consistent with the health of the worker and 
his right to an adequate period of leisure for rest, recreation, 
home life and self-development. To the extent that the work 
schedule is shortened beyond this point the worker as well as 
the community must inevitably pay in the form of a reduced 
standard of living. 

The standard of the work schedule should be the week, vary- 
ing as the peculiar requirements of individual industries may 
demand. Overtime work should, as far as possible, be avoided, 
and one day of rest in seven should be provided. 

6. Settlement of Disputes. Each establishment should pro- 
vide adequate means for the discussion of all questions and the 
just and prompt settlement of all disputes that arise between 
management and men in the course of industrial operation, but 
there should be no improper limitation or impairment of the 
exercise by management of its essential function of judgment 
and direction. 

7. Right to Associate. All men have the right to associate 
voluntarily for the accomplishment of lawful purposes by lawful 
means. The association of men, whether of employers, employes 
or others, for collective action or dealing confers no authority 
and involves no right of compulsion over those who do not 
desire to act or deal with thern as an association. The arbitrary 
use of such collective power to coerce or control others without 
their consent is an infringement of personal liberty and a 
menace to the institutions of a free people. 

8. Responsibility of Associations. The public safety re- 
quires that there shall be no exercise of power without cor- 
responding responsibility. Every association, whether of em- 
ployers or employes, must be equally subject to public authority 
and legally answerable for its own conduct or that of its agents. 

9. Freedom of Contract. With the right to associate recog- 
nized, the fundamental principle of individual freedom demands 
that every person must be free to engage in any lawful occupa- 
tion or enter into any lawful contract as an employer or an em- 
ploye, and be secure in the continuity and rewards of his effort. 
The only qualification to which such liberty of contract is sub- 
ject lies in the power of the state, within limits imposed by the 



PROBLEMS OF LABOR 357 

Constitution, to regulate in the public interest, for example, for 
the promotion of health, safety and morals. 

10. The Open Shop. The principles of individual liberty 
and freedom of contract upon which our institutions are fun- 
damentally based require that there should be no interference 
with the "open shop," that is, the shop in which membership 
or non-membership in any association is not made a condition 
of employment. While fair argument and persuasion are per- 
missable, coercive methods aimed at turning the "open shop" 
into a "closed union" or "closed non-union shop," should not be 
tolerated. 

There should be no denial of the right of an employer and 
his workers voluntarily to agree that their relation shall be that 
of the "closed union shop" or of the "closed non-union shop." 
But the right of the employer and his men to continue their rela- 
tions on the principle of "open shop" should not be denied or 
questioned. No employer should be required to deal with men 
or groups of men who are not his employes or chosen by and 
from among them. 

Under the organization of the "open shop" there is not the 
same opportunity for outside interference on the part of other 
interests to prevent close and harmonious relations between em- 
ployer and employe. Their efforts to continue or secure such 
harmonious relationship are not complicated to the same extent 
by intervention of an outside interest which may have aspira- 
tions and plans of its own to promote, which are not necessarily 
consistent with good relations in the shop. 

ii. The Right to Strike or Lockout. In the statement of 
the principle that should govern as to the right to strike or 
lockout, a sharp distinction should be drawn between the em- 
ployment relations in the field (a) of the private industry; (b) 
of the public utility service; and (c) of government employ- 
ment, federal, state or municipal. In all three there are com- 
mon rights and obligations but, insofar as the right to strike or 
lockout is concerned, the nature of the government service and 
public utility operations requires that they should be considered 
from a somewhat different point of view than private industry. 

In private industry the strike or the lockout is to be de- 
plored; but the right to strike or lockout should not be denied 
as an ultimate resort after all possible means of adjustment 
have been exhausted. Both employers and employes should 
recognize the seriousness of such action and should be held to 



358 SELECTED ARTICLES 

a high responsibility for the same. The statement that the right 
to strike or lockout should not be denied does not cover the 
matter of the sympathetic strike or lockout, where for mere 
purposes of coercion there is a combination deliberately inflicting 
injury upon parties against whom the assailants have no griev- 
ance for the purpose of accomplishing an ulterior result. The 
sympathetic strike is indefensible, anti-social and immoral. The 
same may be said of the blacklist, the boycott, and also of the 
sympathetic lockout. 

In public utility service the public interest and welfare must 
be the paramount and controlling consideration. Modern social 
life demands the uninterrupted and unimpaired operation of 
such service, upon which individuals and communities are as 
dependent as is human life on the uninterrupted circulation of 
the blood. The state should, therefore, impose such regulations 
as will assure continuous operation, at the same time providing 
adequate means for the prompt hearing and adjustment of com- 
plaints and disputes. 

In government employment the orderly and continuous ad- 
ministration of governmental activities is imperative. A strike 
of government employes is an attempt to prevent the operation 
of government until the demands of such employes are granted, 
and cannot be tolerated. No public servant can obey two 
masters; he cannot divide his allegiance between the govern- 
ment which he serves and a private organization which, under 
any circumstances, might obligate him to suspend his duties, or 
agrees to assist him morally or financially if he does. Social 
self-defense demands that no combination to prevent the opera- 
tion of government be permitted. The right of government em- 
ployes to be heard and to secure just redress should be amply 
safeguarded. 

12. Training. Practical plans should be inaugurated in in- 
dustry and outside of it for the training and upgrading of in- 
dustrial workers, their proper placement in industry, the adop- 
tion and adaptation of apprenticeship systems; the extension of 
vocational education and such other adjustments of our educa- 
tional system to the needs of industry as will prepare the worker 
for more effective and profitable service to society and to him- 
self. 

The foregoing is limited to a statement of principles. Only 
casual reference has been made to methods by which such prin- 
ciples may be carried into effect. The problems are so serious 



PROBLEMS OF LABOR 359 

and difficult that such methods must be worked out by the in- 
dividual establishments in conjunction with their employes and 
by industry as a whole. 



TRADE-UNION SOLUTION OF THE CLASH 
OF RIGHTS x 

The capital group in the industrial conference has put forth, 
in a verbal knot and tangle, an illogical and self-contradictory 
half statement of the abstract, legal and conditional rights of 
employers and wage-earners to be recognized in making labor 
contracts. In reply, it is necessary to bring clearly to mind cer- 
tain distinctions as to human rights and to recognize which of 
them are subject to modifications and in what circumstances. 

The abstract rights of individuals are not absolute and in- 
variable. In the abstract, the state guarantees to its citizens the 
rights of life, liberty and property. But in the concrete, the 
state itself subjects these rights to various qualifications, reach- 
ing in extreme instances to entire negation. It abolishes the 
natural right to life in the case of murderers, traitors and violent 
resisters of the law. It continually deprives tens of thousands 
of criminals of their liberty. It quarantines persons in health 
to prevent by their freedom of movement the possible spread of 
contagion. It prohibits women and children from exercising the 
liberty of working when, where and as they please. It denies to 
youth the right to roam the streets in school hours. In time of 
war, it takes away from fathers the right, essential in peace, 
to remain at home and care for their families. At all times, by 
taxation, it enforces a community right over the right to private 
property. In all such examples, the original abstract rights of 
the individual yield to the supreme right of the state to self- 
preservation. 

In like manner, in contractual relationships, for the protec- 
tion of society, the state gives to associations of men rights 
which set aside concepts of the liberties of individuals. It gives 
to associations of medical men the right to refuse memberships 
to any persons deemed by them to be unqualified for the prac- 
tice of medicine. It goes further. It punishes by law men or 
women seeking to practice methods of cure not authorized by 

* Br J. W. Sullivan. International Molders' Journal. 55:888-00. 
November 19 19. 



3 6o SELECTED ARTICLES 

the medical faculty. In the profession of the law, the state en- 
ables associated practitioners to exclude laymen from the bar. 

In like manner the unrestricted right of the wage- worker to 
work at any trade, in any circumstances, with any and all classi- 
fications of other wage-workers, is customarily denied by law. 
Statutes are enforcible for the protection of a body of workers 
against individuals who may put in jeopardy the safety of their 
fellows with respect to life, limb or health, between employers 
and employed under which the latter pass upon the occupational 
fitness of either apprentices or journeymen seeking to work 
among them. 

Amid the confused list of rights recognized by the capital 
group, the fundamental concrete and practical declaration is in- 
contestibly the right of wage earners to organize in trade and 
labor unions and hence to bargain collectively and to be repre- 
sented in negotiations by representatives of their own choosing. 
Once this foundation right is in good faith accepted by employ- 
ers, they take upon themselves the obligation of modifying all 
alleged contract rights of wage workers in general which are 
inconsistent with it as a basic and encompassing principle. In 
accepting this right they concede to an association of wage 
workers the right of its self-preservation, and this includes the 
right when necessary to that end to refuse to work with per- 
sons whose acts would tend to destroy the association. When 
non-associated individuals, asserting their right to "refrain from 
joining any association" and "to deal directly" with employers 
as they choose, decide to accept wages lower than an associa- 
tion scale, to work longer hours than the established workday 
and to put up with working conditions of a worse standard than 
those obtained by the association, they initiate a competition in 
the work shop which tends to disintegrate the association. 

Thereupon, in the absence of organization, competing work- 
ers lower the level of living for the mass to the grade of the 
most necessitous, and hence finally injure society in general 
through the helplessness of all to stand up for even the right to 
live at civilized standards. Prior to the world war, during which 
the cessation of immigration caused a relative scarcity of labor 
in this country, the colossal monopolistic industrial corporations 
systematically reduced their common labor approximately to that 
level. They unremittingly drew upon the vast reservoirs of 
Europe's underpaid and casually employed workers to supply the 



PROBLEMS OF LABOR 361 

enormous turn-over of labor at their plants consequent on the 
12-hour day, a studied scheme of part employment, a wage be- 
low American planes, and living conditions intolerable to human 
beings. In other branches of American industry in which occa- 
sional competition for labor among employers had not been 
superceded by combination, and in which trade unionism had 
not established collective bargaining, labor competition led to 
similar injurious social consequences. At the same time, em- 
ployers in general, aside from those forming an economic, 
oligarchical menace to our republic, were learning to depend 
upon the trade unions, through uniformity in contractual terms, 
for the maintenance of standard occupational training and the 
general conditions of industrial stability. 

It is submitted that these considerations establish the fact 
that the assumed right of any and all wage-workers so to act as 
to bring ruin to the labor associations, which at the present stage 
in the development of society are the sole bulwark against the 
economic degradation of the masses, can not be recognized as 
under all conditions valid. The abstract right of the non- 
unionist "to deal directly with an employer as he chooses" does 
not give him the concrete right which compels unionists to work 
with him. His alleged right to make any contract whatever 
with an employer is, in the absence of a trade union, a mere 
fiction hiding the truth that the employer may play one "free" 
unemployed laborer against another in order to reduce the 
wages of both. The non-unionist has commonly no represen- 
tative to negotiate any wage or work-place rights for him, no 
voice in establishing industrial reforms in the community or na- 
tion, no part in discussing before legislative bodies problems in 
which the wage-workers are the most closely interested. The 
non-unionist common laborer is a social nonentity except as an 
economic serf, serving by chance a benovelent or a malevolent 
economic feudal lord when he is at work and having only the 
opportunity to outbid his fellow wage-earner for a job when 
he is out of work. 

When unionists concede to the non-unionist the legal right 
to refrain from joining any organization or to deal directly with 
his employer, they do not thereby clothe him with the right to 
come among them in the workshop and help the employer to 
create a situation rendering possible the abolition of trade- 
unionism. 



362 SELECTED ARTICLES 

PROPOSALS OF PRESIDENT'S SECOND 
INDUSTRIAL CONFERENCE 

Summary of Proposals 

The Industrial Conference, convened by the President in 
Washington on December I, issues this statement in the desire 
that certain tentative proposals be given considerate study by 
interested individuals and organizations throughout the country. 
It will reassemble on January 12 and will then carefully consider 
any constructive criticisms that may be submitted to it. 

Pending the growth of better relationships between employ- 
ers and employees, the practical approach to the problem is to 
devise a method of preventing or retarding conflicts by provid- 
ing machinery for the adjustment of differences. The Confer- 
ence believes that it is possible to set up a more effective series 
of tribunals for the adjustment of disputes than at present 
exists. To be successful, such tribunals must be so organized as 
to operate promptly as well as impartially. There must be full 
participation by employers and employees. There must be repre- 
sentation of the public to safeguard the public interest. The 
machinery should not be used to promote unfairly the interests 
of organizations, either of labor or of capital. The plain fact 
is that the public has long been uneasy about the power of great 
employers ; it is becoming uneasy about the power of great labor 
organizations. The community must be assured against domi- 
nation by either. On the other hand, there must be equal as- 
surance that such machinery will not be used to discriminate 
against organizations of employees or of employers. Both 
should be protected. The right of association on either side 
should not be affected or denied as a result of the erection of 
such tribunals. 

The plan which follows does not propose to do away with the 
ultimate right to strike, to discharge, or to maintain the closed 
or the open shop. It is designed to bring about a frank meeting 
of the interested parties and cool and calm consideration of the 
questions involved, in association with other persons familiar 
with the industry. 

The plan is national in scope and operation, yet it is decen- 
tralized. It is different from anything in operation elsewhere. 
It is based upon American experience and is designed to meet 
American conditions. To facilitate discussion, the plan sub- 
mitted, while entirely tentative, is expressed in positive form 
and made definite as to most details. 



PROBLEMS OF LABOR 363 

Plan for Board of Inquiry and Adjustment 
National Tribunal and Regional Boards 

There shall be established a National Industrial Tribunal, and 
Regional Boards of Inquiry and Adjustment. 

National Industrial Tribunal 

The National Industrial Tribunal shall have its headquarters 
in Washington, and shall be composed of nine members chosen 
by the President and confirmed by the Senate. Three shall repre- 
sent the employers of the country and shall be appointed upon 
nomination of the Secretary of Commerce. Three shall repre- 
sent employees and shall be appointed upon nomination of the 
Secretary of Labor. Three shall be representatives of the public 
interest. Not more than five of the members shall be of the 
same political party. 

The tribunal shall be, in general, a board of appeal. Its de- 
terminations on disputes coming to it upon an appeal shall be by 
unanimous vote. In case it is unable to reach a determination, 
it shall make and publish majority and minority reports which 
shall be matters of public record. 

Industrial Regions 

The United States shall be divided into a specified number 
of industrial regions. The Conference suggests 12 regions with 
boundaries similar to those established under the Federal Re- 
serve system, with such modifications as the industrial situation 
may make desirable. 

Regional Chairmen and Vice-Chairmen 

In each region the President shall appoint, a regional chair- 
man. He shall be a representative of the public interest, shall 
be appointed for a term of three years and be eligible for re- 
appointment. 

Whenever in any industrial region, because of the multiplicity 
of disputes, prompt action by the Regional Board is impossible, 
or where the situation makes it desirable, the National Industrial 
Tribunal may in its discretion choose one or more vice-chair- 
men and provide for the establishment under their chairmanship 
of additional regional boards. 



364 SELECTED ARTICLES 

Panels of Employers and Employees for Regional Boards 

Panels of employers and employees for each region shall be 
prepared by the Secretary of Commerce and the Secretary of 
Labor, respectively, after conference with the employers and em- 
ployees, respectively, of the regions. The panels shall be ap- 
proved by the President. 

At least 20 days before their submission to the President 
provisional lists for the panels in each region shall be published 
in such region. 

The panels of employers shall be classified by industries; 
the panels of employees shall be classified by industries and 
subclassified by crafts. The names of employers and employees 
selected shall be at first entered on their respective panels in an 
order determined by lot. 

The selection from the panels for service upon the Regional 
Boards shall be made in rotation by the regional chairman; 
after service the name of the one so chosen shall be transferred 
to the foot of the panel. 

Regional Boards of Adjustment 

Whenever a dispute arises in a plant or group of plants 
which is not settled by agreement of the parties or by existing 
machinery, the chairman may on his motion, unless disapproved 
by the National Industrial Tribunal, and shall at the request of 
the Secretary of Commerce or the Secretary of Labor or the 
National Industrial Tribunal, request each side concerned in 
such dispute to submit it for adjustment to a Regional Board 
of Adjustment. To this end each side shall, if willing to make 
such submission, select within not less than two nor more than 
seven days, at the discretion of the chairman, a representative. 
Such selection shall be made in accordance with the rules and 
regulations to be Jaid down by the National Industrial Tribunal 
for the purpose of insuring free and prompt choice of the repre- 
sentatives. 

The appointment of representatives of both sides shall con- 
stitute an agreement to submit the issue for adjustment and 
further shall constitute an agreement by both sides that they 
will continue, or reestablish and continue, the status that existed 
at the time the dispute arose. 



PROBLEMS OF LABOR 365 

Regional Boards of Inquiry 

If either side to the dispute fails, within the period fixed by 
the chairman, to select its representative, the chairman shall 
proceed to organize a Regional Board of Inquiry. Such Re- 
gional Board of Inquiry shall consist of the regional chairman, 
two employers selected in the manner specified from the em- 
ployers' panel, and two employees selected in like manner from 
the employees' panel and of the representative of either side that 
may have selected a representative and agreed to submit the 
dispute to the board. If neither side shall select a representa- 
tive within the time fixed by the chairman, the Board of Inquiry 
shall consist of the chairman and the four panel members only. 

The Board of Inquiry as so constituted shall proceed to in- 
vestigate the dispute and make and publish a report, or majority 
and minority reports, of the conclusions reached, within 5 days 
after the close of its hearings, and within not more than 30 days 
from the date of issue of the original request by the chairman to 
the two sides to the dispute, unless extended on unanimous re- 
quest of the board or the National Industrial Tribunal. It shall 
transmit copies of this report or reports to the Secretaries of 
Commerce and of Labor, respectively, and to the National Indus- 
trial Tribunal, where they shall be matters of public record. 

Umpire 

When a Regional Board of Adjustment is unable to reach 
a unanimous determination it may by unanimous vote select an 
umpire and refer the dispute to him with the provision that his 
determination shall be final and shall have the same force and 
effect as a unanimous determination of such Regional Board. 

Effect of Decision 

Whenever an agreement is reached by the parties to a dis- 
pute or a determination is announced by a Regional Board of 
Adjustment, or by an Umpire, or by the National Industrial 
Tribunal, the agreement or determination shall have the full 
force and effect of a trade agreement which the parties to the 
dispute are bound to carry out. 

General Provisions 

In connection with their task of inquiry and adjustment, the 
Regional Boards and the National Tribunal shall have the right 



366 SELECTED ARTICLES 

to subpoena witnesses, to examine them under oath, to require 
the production of books and papers pertinent to the inquiry, and 
their assistance in all proper ways to enable the boards to 
ascertain the facts in reference to the causes of the dispute and 
the basis of a fair adjustment. Provision shall be made by law 
for the protection of witnesses and to prevent the misuse of any 
information so obtained. 

In the presentation of evidence to the tribunal and the boards 
each side shall have the right to present its position through 
representatives of its own choosing. 

Special Provisions 

The terms of office of members of the National Industrial 
Board shall be six years; at the outset three members, includ- 
ing one from each group, shall be appointed for a term of two 
years, three members for a term of four years, and three mem- 
bers for a term of six years ; thereafter three members, one 
from each group, shall retire at the end of each period of two 
years. 

Relation of Boards to Existing Machinery for 
Conciliation and Adjustment 

The establishment of the National Industrial Tribunal and 
the Regional Boards described shall not affect existing machin- 
ery of conciliation, adjustment, and arbitration established under 
the Federal Government, under the governments of the several 
States and Territories or subdivisions thereof, or under mutual 
agreements of employers and employees. 

Statement as to Public Utility Industries 

The Conference believes that a plan of tribunals or Boards of 
Adjustment and Inquiry should be applied to public utilities, but 
in the adaptation of the plan two problems present themselves. 
First, governmental regulation of public utilities is now usually 
confined to rates and services. The Conference considers that 
there must be some merging of responsibility for regulation of 
rates and services and the settlement of wages and conditions 
of labor. Such co-ordination would give greater security to 
the public, to employee, and to employer. Second, is the prob- 
lem whether some method can be arrived at that will avert all 
danger of interruption to service. These matters require further 
consideration before concrete proposals are put forward. 



PROBLEMS OF LABOR 367 

Statement as to Government Employees 

The right of Government employees to associate for mutual 
protection, the advancement of their interests, or the presenta- 
tion of grievances cannot be denied, but no such employees who 
are connected with the administration of justice or the main- 
tenance of public safety or public order should be permitted to 
join or retain membership in any organization which authorizes 
the use of the strike or which is affiliated with any organiza- 
tion which authorizes the strike. 

Further Work of the Conference 

On reconvening the Conference will continue its considera- 
tion of tribunals for the furtherance of industrial peace in gen- 
eral industry in the light of whatever criticisms and suggestions 
the publication of its tentative plan may call forth. It will re- 
ceive reports of investigations that are being made for it. On 
the basis of such reports and of further study of these and the 
other subjects within its field, the Conference hopes that it may 
be able to contribute something more toward the better indus- 
trial relations described in the words addressed to it by the 
President when he called it into being — relations in which "the 
workman will feel himself induced to put forth greater effort." 

The President's Industrial Conference 



Oscar S. Straus 
Henry C. Stuart 
F. W. Taussig 
William O. Thompson 
Henry J. Waters 
George W. Wickersham 
Owen D. Young 

Attested : 

Henry R. Seager, 

Executive Secretary. 
December 19, 1919. 



(Signed) 


W. B. Wilson 


Chairman 


Herbert Hoover 


Vice Chairman 


Martin H. Glynn 


Thomas W. Gregory 


Richard Hooker 


Stanley King 


Samuel W. McCall 


: Henry M. Robinson 


Julius Rosenwald 


Members 



368 SELECTED ARTICLES 

A NEW INDUSTRIAL CREED 1 

The basic facts as to the fundamental relations between the 
parties in industry are as right, as just and as vital for the com- 
mon success of the industry of today as in the earlier times. 
The question which confronts the student of industrial problems 
is how to re-establish personal relations and co-operation in 
spite of the changed conditions. The answer is not doubtful 
or questionable, but absolutely clear and unmistakable : Through 
adequate representation of the four parties thereto in the coun- 
cils of industry. 

Various methods of representation have been adopted, of 
which perhaps the most conspicuous is the labor union. As 
regards the organization of labor, it is just as proper and advan- 
tageous for labor to associate itself into organized groups for 
the advancement of its legitimate interests as for capital to com- 
bine for the same objects. Such associations of labor manifest 
themselves in collective bargaining, in an effort to secure better 
working and living conditions, in providing machinery whereby 
grievances may easily and without prejudice to the individual 
be taken up with the management. 

But organization has its danger. Organized capital some- 
times conducts itself in an unworthy manner, contrary to law 
and in disregard of the interest both of labor and the public. 
Such organizations cannot be too strongly condemned or too 
vigorously dealt with. Although they are the exception, such 
publicity is generally given to their unsocial acts that all organi- 
zations of capital, however rightly managed or broadly bene- 
ficent, are thereby brought under suspicion. 

Likewise it sometimes happens that organizations of labor are 
conducted without just regard for the rights of the employer or 
the public and methods and practices adopted which, because 
unworthy or unlawful, are deserving of public censure. Such 
organizations of labor bring discredit and suspicion upon other 
organizations which are legitimate and useful, just as is the case 
with improper organizations of capital, and they should be 
similarly dealt with. 

Fundamentally Sound 

We should not, however, allow the occasional failure in the 
working of the principle of the organization of labor to preju- 
dice us against the principle itself, for the principle is funda- 

/t> 1 By J olm D - Rockefeller, Jr. From an article in Current Affairs 
(Boston). December 16, 1918. p. 7. 42-3, 46. 



PROBLEMS OF LABOR 369 

mentally sound. In the further development of the organization 
of labor and of large business, the public interest as well as the 
interest of labor and capital alike will be best advanced by what- 
ever stimulates every man to do the best work of which he is 
capable; but a fuller recognition of the common interest of em- 
ployers and employed, and by an earnest effort to dispel distrust 
and hatred and to promote good will. 

While labor unions have secured for labor in general many 
advantages in hours, wages and standards of working conditions, 
a large proportion of the workers of the country are outside of 
these organizations and are to that extent not in a position to 
bargain collectively. 

War Labor Board 

Since the United States went into the war the representation 
of both labor and capital in common councils has been brought 
about through the War Labor Board, composed equally of men 
from the ranks of labor and the ranks of capital. Whenever 
questions of dispute have arisen in various industries in which 
there was no internal machinery which could deal with them 
to the mutual satisfaction of the parties in interest, the War 
Labor Board has stepped in and made its findings and recom- 
mendations, which have been accepted and adopted by both la- 
bor and capital in practically every instance. In this way more 
continuous operation has been made possible and the resort to 
the strike and lockout has been less frequent. 

In England there have been made during the past year three 
important government investigations and reports looking toward 
a more complete program of representation and co-operation on 
the part of labor and capital. The first is commonly known as 
the Whitley Report, made by the Reconstruction Committee, 
now the Ministry of Reconstruction, through a Sub-Committee 
on Relations Between Employers and Employed, of which the 
Right Hon. J. H. Whitley, M. P., was chairman. 

Whitley Plan 

The Whitley plan seeks to unite the organizations of labor 
and capital by a bond of common interest in a common venture ; 
it changes at a single stroke the attitude of these powerful aggre- 
gations of class interest from one of militancy to one of social 
service ; it establishes a new relation in industry. Problems old 
and new, says the report, will find their solution in a frank 
partnership of knowledge, experience and good will. 



370 SELECTED ARTICLES 

Another investigation and report was made by a Commission 
on Industrial Unrest appointed by the Prime Minister, which 
made the following interesting recommendations: 

1. That the principle of the Whitley report as regards in- 
dustrial councils be adopted. 

2. That each trade should have a constitution. 

3. That labor should take part in the affairs of industry 
as partners rather than as employes in the narrow sense of the 
term. 

4. That closer contact should be set up between the employ- 
ers and employed. 

The third report, prepared by the Ministry of Labor, on the 
question of the constitution and working of the works commit- 
tee in a number of industries, is a valuable treatise on the 
objects, functions and methods of procedure which have been 
tried in actual practice. 

These reports, together with a report on reconstruction, made 
by a sub-committee of the British Labor party, outlining its 
reconstruction program, a most comprehensive and thoughtful 
document, indicates the extent and variety of the study which 
has been given to the great problem of industrial reconstruc- 
tion in England. All point toward the need of more adequate 
representation of labor in the conduct of industry and the im- 
portance of closer relations between labor and capital. 

A simpler plan than those to which reference has been 
made, less comprehensive and complete, building from the 
bottom up, has been in operation for varying periods of time in 
a number of industries in this country, notably the Standard Oil 
Company of New Jersey, the Colorado Fuel and Iron Company, 
the Consolidation Coal Companj^, several of the works of the 
General Electric Company, and others, and is worthy of serious 
consideration in this connection. 

Beginning with the election of representatives in a single 
plant, it is capable of indefinite development to meet the com- 
plex needs of any industry and a wide extension to include all 
industries. Equally applicable in industries where union or non- 
union labor, or both, are employed, it seeks to provide full and 
fair representation of labor, capital and management, taking 
cognizance also of the community, to which representation 
could easily be accorded, and has thus far developed a spirit of 
co-operation and good will which commends it to both employer 



PROBLEMS OF LABOR 37i 

and employee. The outstanding features of the plan are briefly 
as follows : 

Chosen Representatives 

Representatives chosen by the employes in proportion to 
their number from their fellow workers in each plant form a 
basis of the plan. Joint committees, composed of an equal num- 
ber of employes or their representatives and an equal number of 
officers of the company, are found in each plant or district. 

These committees deal with questions of co-operation and 
conciliation, safety and accident, sanitation, health and housing, 
recreation and education. Joint conferences of representatives 
and officers of the company are held in the various districts 
several times each year, and there is also an annual joint con- 
ference, at which reports from all districts are received and 
considered. 

Another important feature of the plan is an officer known 
as the President's Industrial Representative, whose duty it is to 
visit currently all the plants and confer with the representatives, 
as well as to be available always for conference at the request 
of the representatives. 

Thus it will be seen that the employes, through their repre- 
sentatives chosen from among themselves, are in constant touch 
and conference with the owners through their representatives 
and the officers in regard to matters pertaining to their common 
interest. 

The employes' right of appeal is the third outstanding feature 
of the plan. Any employe with a grievance, real or imaginary, 
may go with it at once to his representatives, who frequently 
find there is no real ground for grievance and are able to so con- 
vince the employe. But if a real grievance exists or dissatisfac- 
tion on the part of the employe continues, the matter is carried 
to the local boss, foreman or superintendent, where, in the ma- 
jority of cases, questions are amicably and satisfactorily settled. 

Further Appeal 

Further appeal is open to the aggrieved employe to the higher 
officers and to the president, and if satisfaction is not had here, 
the court of last appeal may be the Industrial Commission of the 
State, where such a commission exists; the State Labor Board, 
or a committee of arbitration. Experience proves that the vast 



372 SELECTED ARTICLES 

majority of difficulties which occur in an industry arise between 
the workmen and subordinate officers with whom they are in 
daily contact. 

These petty officials are sometimes arbitrary, and it is by 
their attitude and action that the higher officials and the stock- 
holders are judged. Obviously, the right of appeal from their 
decision is important, and, even if seldom availed of, tends of 
itself to modify their attitude. 

A further feature of the plan is the employes' bill of rights. 
This covers such matters as the right to caution and suspension 
before discharge, except for such serious offenses as are posted 
at the works, the right to hold meetings at appropriate places 
outside of working hours, the right without discrimination to 
membership or non-membership in any society, fraternity or 
union, and the right of appeal to which reference has just been 
made. 

Where some such plan as this has been in operation for a 
considerable space of time, some of the results obtained are : 

First — Uninterrupted operation of the plants and increased 
output. 

Second — Improved working and living conditions. 

Third — Frequent and close contact between employes and 
officers. 

Fourth — The elimination of grievances as disturbing factors. 

Fifth — Good will developed to a high degree. 

Sixth — The creation of a community spirit. 

Based as it is upon principles of justice to all those interested 
in its operation, its success can be counted on so long as it is 
carried out in a spirit of sincerity and fair play. Futhermore, 
it is a vital factor in re-establishing personal relations between 
the parties in interest and developing a genuine spirit of brother- 
hood among them. 

Here, then, would seem to be a method of providing repre- 
sentation which is just, which is effective, which is applicable to 
all employes whether organized or unorganized, to all employers 
whether in associations or not, which does not compete or inter- 
fere with organizations or associations in existence, and which, 
while developed in a single industrial plant as a unit, may be 
expanded to include all plants of the same industry, as well as 
all industries. 

If the foregoing points which I have endeavored to make 



PROBLEMS OF LABOR 373 

arc sound, might not the four parties to industry subscribe to 
an industrial creed somewhat as follows : 

i. I believe that labor and capital are partners, not enemies; 
that their interests are common interests, not opposed, and that 
neither can attain the fullest measure of prosperity at the ex- 
pense of the other, but only in association with the other. 

2. I believe that the community. is an essential party to in- 
dustry, and that it should have adequate representation with the 
other parties. 

3. I believe that the purpose of industry is quite as much to 
advance social well-being as material well-being and that in the 
pursuit of that purpose the interests of the community should 
be carefully considered, the well-being of the employes as re- 
spects living and working conditions should be fully guarded, 
management should be adequately recognized and capital should 
be justly compensated, and that failure in any of these par- 
ticulars means loss to all four. 

4. I believe that every man is entitled to an opportunity to 
earn a living, to fair wages, to reasonable hours of work and 
proper working conditions, to a decent home, to the opportunity 
to play, to learn, to worship and to love, as well as to toil, and 
that the responsibility rests as heavily upon industry as upon 
government or society, to see that these conditions and oppor- 
tunities prevail. 

5. I believe that industry, efficiency and initiative, wherever 
found, should be encouraged and adequately rewarded and that 
indolence, indifference and restriction of production should be 
discountenanced. 

6. I believe that the provision of adequate means for un- 
covering grievances and promptly adjusting them, is of funda- 
mental importance to the successful conduct of industry. 

7. I believe that the most potent measure in bringing about 
industrial harmony and prosperity is adequate representation 
of the parties in interest; that existing forms of representation 
should be carefully studied and availed of in so far as they may 
be found to have merit and are adaptable to the peculiar condi-* 
tions in the various industries. 

8. I believe that the most effective structure of representa- 
tion is that which is built from the bottom up, which includes 
all employes, and, starting with the election of representatives 
in each industrial plant, the formation of joint works commit- 
tees, of joint district councils and annual joint conferences of 



374 SELECTED ARTICLES 

all the parties in interest in a single industrial corporation, can 
be extended to include all plants in the same industry, all indus- 
tries in a community, in a nation and in the various nations. 

9. I believe that the application of right principles never 
fails to effect right relations; that the letter killeth and the 
spirit maketh alive; that forms are wholly secondary while at- 
titude and spirit are all important, and that only as the parties 
in industry are animated by the spirit of fair pla}', justice to all 
and brotherhood, will any plans which they may mutually work 
out succeed. 

10. I believe that that man renders the greatest social ser- 
vice who so co-operates in the organization of industry as to 
afford to the largest number of men the greatest opportunity for 
self -development and the enjoyment by every man of those bent- 
fits which his own work adds to the wealth of civilization. 

The Social Ideal 

In the days when kings and queens reigned over their sub- 
jects, the gratification of the desires of those in high places was 
regarded as of supreme moment, but in these days the selfish 
pursuit of personal ends at the expense of the group can arid 
will no longer be tolerated. Men are rapidly coming to see that 
human life is of infinitely greater valuer than material wealth, 
that the health, happiness and well-being of the individual, how- 
ever humble, is not to be sacrificed to the selfish aggrandize- 
ment of the more fortunate or more powerful. 

Modern thought is placing less emphasis on material con- 
siderations. It is recognizing that the basis of national progress, 
whether industrial or social, is the health, efficiency and spiritual 
development of the people. Never has there been a more pro- 
found belief in human life than today. Whether men worki with 
brain or brawn, they are human beings, with the same cravings, 
the same aspirations, the same hatreds, the same capacity for 
suffering and for enjoyment. 

Standpatters Face Failure 

As the leaders of industry face this period of reconstruction, 
what will their attitude be? Will it be that of the standpatters, 
who take no account of the extraordinary changes which have 
come over the face of the civilized world and have taken place 
in the minds of men, who say: "What has been and is must 
continue to be — with our backs to the wall we will fight it out 
along the old lines or go down with the ship/' who attempt stub- 



PROBLEMS OF LABOR 375 

bornly to resist the inevitable, and arming themselves to the 
teeth, invite open warfare with the other parties in industry, the 
certain outcome of which will be financial loss, inconvenience 
and suffering to all, the development of bitterness and hatred, 
and in the end the bringing about through legislation if not by 
force of conditions far more drastic and radical than could now 
be amicably arrived at through mutual concession in friendly 
conference ? 

The New Spirit 

Or will it be an attitude, in which I myself profoundly be- 
lieve, which takes cognizance of the inherent right and justice 
of the principle underlying the new order, which recognizes that 
mighty changes are inevitable, many of them desirable, which, 
not waiting until forced to adopt new methods, takes the lead 
in calling together the parties in interest for a round-table con- 
ference to be held in a spirit of justice, fair play and brother- 
hood, with a view to working out some plan for co-operation 
which will insure to all those concerned adequate representa- 
tion, an opportunity to earn a fair wage under proper working 
and living conditions, with such restrictions as to hours as shall 
leave time not alone for food and sleep, but also for recreation 
and the development of the higher things of life. 

Never was there such an opportunity as exists today for the 
industrial leader with clear vision and broad sympathy per- 
manently to bridge the chasm that is daily gaping wider between 
the parties in interest and to establish a solid foundation for in- 
dustrial prosperity, social improvement and national solidarity. 

Future generations will rise up and call those men blessed 
who have the courage of their convictions, a proper appreciation 
of the value of human life as contrasted with material gain, and 
who, embued with the spirit of brotherhood, will lay hold of 
the great opportunity for leadership which is open to them today. 

In conclusion let it be said that upon the heads of these lead- 
ers — it matters not to which of the four parties they belong — 
who refuse to reorganize their industrial households in the light 
of the modern spirit, will rest the responsibility for such radical 
and drastic measures as may later be forced upon industry if 
the highest interests of all are not shortly considered and dealt 
with in a spirit of fairness. Who, I say, dares to block the 
wheels of progress, and to fail to recognize and seize the pres- 
ent opportunity of helping to usher in a new era of industrial 
peace and prosperity? 



57^ 



SELECTED ARTICLES 



HOW CAN THE EMPLOYER HELP THE WORK- 
ER SATISFY HIS FUNDAMENTAL 
HUMAN INSTINCTS? 



1 -j i 



/. The Instinct of Self -Preservation 

Maintain healthy working conditions. Guard against over- 
fatigue. Provide safety devices. No man can do his work well 
if he feels it is fitting him only for the scrap heap. 

Provide a living wage. 

Assure your men of steady jobs as long as they do their 
part. Let them know that, if laid off without any fault of theirs, 
they will be given due notice or a suitable dismissal wage. 
Energy dissipated in worry means loss to all concerned. 

//. The Instinct of Workmanship 

Find the right job, mentally and physically, for every man 
and the right man for every job. 

Enable the man, b} T exact records, to have a true and accurate 
picture of his work and of any improvement he makes in it. 

Educate him to understand what part his work plays in the 
whole, and the uses to be made of the product. 

Encourage the workman to suggest improvements in the 
processes and thus stimulate personal interest. 

Make it possible for the workmen to participate collectively 
and regularly in determining the processes of production. 

Guard against the tendency to let the workers slip into dead- 
end jobs. Make it plain that efficiency means advancement. 

Encourage promotions and the development of all-round 
ability. 

Make your directions to workmen clear, concrete and specific 
and have a well thought-out plan of work. Set the men a good 
example as to standards of workmanship. 

III. The Instinct of Self -Respect 

Utilize the records of work to give the credit and standing 

which a good record deserves in the eyes of the employer and 

of fellow workers. The spirit of rivalry spurs initiative. 

So far as possible, use praise as the chief incentive rather 

than blame or threat of dismissal. If it is really necessary to 

call a man down, avoid doing so before his fellow workers. 

1 By Irving Fisher, Professor of Political economy, Yale University. 
In the Survey for March, 29 m 19 19. p. 937. 



PROBLEMS OF LABOR 377 

Consider a man trustworthy until he has proved himself un- 
trustworthy. Even-handed justice is recognized by saint and 
sinner. 

IV. The Instinct of Loyalty 

Encourage the men to develop a team spirit by forming an 
organization of some kind. 

Collective bargaining, participation in shop-management, 
mass activities, group singing, marching in a parade, wearing a 
button, or cheering a baseball team will foster a united feeling. 

Make the organization worth being proud of. Pride is a 
weather-proof cement. 

Loyalty is based on justice and mutual consideration. Prove 
to the workman that 3*011 respect his rights and wishes. Put 
yourself in his place. 

Afford an opportunity for presenting grievances and for 
their adjustment. 

If you want overtime or special consideration from him let 
him, if possible, have the fun of volunteering the service. 

V. The Instinct of Play 

"All work and no play makes Jack a dull boy." The balanced 
life demands recreation which provides a safety valve for many 
inevitably repressed instincts. This play should be not frivolity, 
still less dissipation, but entertainment which will develop phys- 
ical and mental health and a broadened outlook on life. A long 
workday makes proper play impossible, and is largely responsible 
for the man's resort to drink and other perversions of play. 

Encourage membership on athletic teams, attendance at good 
movies, at reading rooms, and clubs. Have singing at the noon 
hour, and calisthenics to interrupt the morning and the after- 
noon. At least, try brief rest periods. 

VI. The Instinct of Love 

Conditions of employment should, in every way possible, 
conduce to happy family life. The unrest caused by bad in- 
stinctive life outside the plant is demoralizing. 

A man thinks of his family as part of himself. His success 
means their happiness. 

Do not arouse resentment by any action which affects the 
family welfare. 

A workman with no home, or an unhappy home, is unstable. 



378 SELECTED ARTICLES 

VII. The Instinct of Worship - 

"Man shall not live by bread alone." No man should be 
compelled to do work which will prevent attendance at church 
or inspiring public meeting, or crush idealism, or warp the spirit 
of humanity and service. 

Every man should have a religion ; and his daily work should 
be uplifted by, and really be a part of, his religion. 



In a word, your employe is a man with the same fundamental 
human nature as yourself. If he is to be loyal, efficient, and 
contented, he must have the opportunity to give expression to 
the best that is in him. Without self-expression no man can 
lead a normal life. It is His initiative which 3^ou should aim to 
encourage. This is not the ordinary offensive paternalism in 
which the employer takes the initiative and seeks to impose his 
ideas on a passive or unwilling workman. 

There is no adequate self-expression without a reasonable 
amount of self direction. When the worker can be given a stake 
in the business and a voice in its management almost all the 
important motives are enlisted and strengthened — the motives of 
money-making, accumulating, creating, gaining credit, team play. 



THE NEW LABOR CODE OF THE WORLD x 

Summary of Conventions and Re commendations of the 
International Labor Conference 

I. Limitation of Hours 

The working hours of persons employed in any public or 
private industrial undertaking or in any branch thereof other 
than an undertaking in which only members of the same family 
are employed shall not exceed eight in the day and forty-eight 
in the week, with the exception herein provided for. 

77. Free Employment Agencies 

Each member which ratifies this convention shall establish a 
system of free employment agencies under the control of a cen- 
tral authority. Committees which shall include representatives 
of employers and of workers, shall be appointed to advise on 
matters concerning the carrying on of these agencies. 

1 Survey. 43:Sec. II. December 20, 1919. 



PROBLEMS OF LABOR 379 

///. Unemployment Insurance 

The members of the International Labor Organization which 
ratify this convention and which shall have established systems 
of insurance against unemployment shall, upon terms agreed be- 
tween the members concerned, make arrangements whereby 
workers belonging to one member and working in the territory 
of another shall be admitted to the same rates of benefit of such 
insurance as those which obtain for the workers belonging to 
the latter. 

IV. Recruiting of Labor 

The recruiting of bodies of laborers in one country with a 
view to their employment in another country should be per- 
mitted only by mutual agreement between the countries con- 
cerned and after consultation with employers and workers in 
each country in the industries concerned. 

V. Reciprocity for Workers 

Each member of the International Labor Organization shall, 
on condition of reciprocity and upon terms to be agreed between 
the countries concerned, admit the foreign workers (together 
with their families) employed within its territory, to the benefit 
of its laws and regulations for the protection of its own workers, 
as well as to the right of lawful organization as enjoyed by its 
own workers. 

VI. The Employment of Women 

A woman shall not be permitted to work during six weeks 
following her confinement; shall have the right to leave her 
work if she produces a medical certificate stating that her con- 
finement will probably take place within six weeks. 

Women without distinction of age shall not be employed 
during the night in any public or private industrial undertaking. 

In view of the dangers involved to the function of maternity 
and to the physical development of children, women and young 
persons under the age of eighteen years should be excluded 
from employment in . . . [specified processes in which lead 
compounds are used]. 

VII. The Employment of Children 

Children under the age of fourteen shall not be employed in 
any public or private industrial undertaking or in any branch 



3 8o SELECTED ARTICLES 

thereof other than an undertaking in which only members of 
the same family are employed. 

Young persons under eighteen years of age shall not be em- 
ployed during the night in any public or private industrial 
undertaking, etc. 

VIII. White Phosphorus in Matches 

Each member of the International Labor Organization, which 
has not already done so, should adhere to the international con- 
vention adopted at Berne in 1906 on the prohibition of the use 
of white phosphorus in the manufacture of matches. 

IX. Anthrax 

Arrangements should be made for the disinfection of wool 
infected with anthrax spores, either in the country exporting 
such wool or, if that is not practicable, at the port of entry in 
the country importing such wool. 



Foreword 

In thirty days' time the International Labor Conference cre- 
ated the first genuine world code. The initial sessions of this 
pioneer congress held under the authority of the League of Na- 
tions, lasted only one mouth. The assemblage was convened on 
October 29. On November 29 the conference adjourned. 
Within that period twenty-five sessions were held. The confer- 
ence was handicapped by the barrier of language. Translation 
rendered debate slow. Despite this necessity for repetition the 
International Labor Conference actually did its work with sur- 
prising facility. 

The United States Senate consumed five months in refusing 
to ratify the treaty. In contrast the achievements of the labor 
conference stand out vividly. Employers, employes, and gov- 
ernmental officials showed in the international conference a 
capacity for cooperation and a determination to build which are 
good omens for the future of the League of Nations. If the 
delegates had been moved by petty considerations this first at- 
tempt at international legislation would have been doomed. If 
furthermore the International Labor Conference had failed to 
agree, the possibility of attaining other success under the ma- 
chinery of the League of Nations would have been seriously 
injured. 

The conference energetically and wisely concentrated its at- 



PROBLEMS OF LABOR 3&1 

tention on the program prepared for it by the Peace Conference. 
Able work was done. No American legislative body, certainly, 
has ever made such effective use of scientific methods or of ex- 
pert assistance in the formulation of laws. Skilled advisers 
from the constituent members of the League participated. The 
conference drafted principles which if applied will mean enorm- 
ous industrial progress ever}^where. But it was not content 
merely to enunciate principles. Realizing that the value of a 
law is measured by the degree of its enforcement, the confer- 
ence rightly urged that every country which accepted its recom- 
mendations and legalized its draft conventions establish the 
requisite machinery for inspection and enforcement. 

The conference dealt with all of the five items of the agenda 
referred to it by the peace conference. These were: 

1. x\pplication of principle of the eight-hour day or of the 

forty-eight hour week. 

2. Question of preventing or providing against unemployment. 

3. Women's employment : 

(a) Before and after child-birth, including the question 

of maternity benefit; 

(b) During the night; 

(c) In unhealthy processes. 

4. Employment of children : 

(a) Minimum age of employment; 

(b) During the night; 

(c) In unhealthy processes. 

5. Extension and application of the International Conventions 

adopted at Berne in 1906 on the prohibition of night work 
for women employed in industry and the prohibition of 
the use of white phosphorus in the manufacture of 
matches. 
The paragraphs which deal with the machinery of ratifica- 
tion are identical in each case. Consequently they are repro- 
duced only once in this reprint. The form used for the draft 
conventions throughout is that here printed in full in the con- 
vention dealing with the eight-hour day and the forty-eight-hour 
week. The form of introduction used in connection with the 
recommendations is consistently that set forth in the proposal 
dealing with unemployment. 

The principles formulated become effective only when made 
legal by the legislative agencies of the governments composing 
the League of Nations. 



382 SELECTED ARTICLES 

Conventions and recommendations 

Draft Convention Limiting the Hours of Work in Industrial 

Undertakings to Eight in the Day and Forty-eight 

in the Week 

The General Conference of the International Labor Organi- 
zation of the League of Nations, Having been convened at 
Washington by the Government of the United States of Amer- 
ica, on the 29th day of October, 1919, and 

Having decided upon the adoption of certain proposals with 
regard to the "application of the principle of the eight-hours day 
or the forty-eight-hours week," which is the first item in the 
agenda for the Washington meeting of the Conference, and 

Having determined that these proposals shall take the form 
of a draft international convention, adopts the following Draft 
Convention for ratification by the Members of the International 
Labor Organization, in accordance with the Labor Part of the 
Treaty of Versailles of 28 June, 1919, and of the Treaty of St. 
Germain of 10 September, 1919: 

Article i. For the purpose of this Convention, the term 
"industrial undertaking" includes particularly: 

(a) Mines, quarries, and other works for the extraction of minerals 
from the earth. 

(&) Industries in which articles are manufactured, altered, cleaned 
repaired ornamented, furnished, adapted for sale, broken up or de- 
molished, or in which materials ^ are transformed; including shipbuilding 
and the generation, transformation and transmission of electricity or 
motive power of any kind. 

(c) Construction, reconstruction, maintenance, repair, alteration, or 
demolition of any building, railway, tramway harbour, dock pier canal, 
inland waterway, road, tunnel, bridge viaduct sewer drain, well, telegraphic 
or telephonic installation, electrical undertaking, gas work, water work 
or other work of construction as well as the preparation for or laying 
the foundations of any such work or structure. 

(d) Transport of passengers, or goods, by road, rail, sea or inland 
waterway, including the handling of goods at docks, quays, wharves or 
warehouses, but excluding transport by hand. 

The provisions relative to transport by sea and on inland 
waterways shall be determined by a special conference dealing 
with employment at sea and on inland waterways. 

The competent authority in each country shall define the 
line of division which separates industry from commerce and 
agriculture. 

Article 2. The working hours of persons employed in any 
public or private industrial undertaking or in any branch 
thereof, other than an undertaking in which only members of the 
same family are employed, shall not exceed eight in the day and 
forty-eight in the week, with exceptions hereinafter provided for. 



PROBLEMS OF LABOR 383 

(a) The provisions of this Convention shall not apply to persons 
holding positions of supervision or management, nor to persons em- 
ployed in a confidential capacity. 

(fr) Where by law, custom, or agreement between employers' and 
workers' organizations, or where no such organizations exist between em- 
ployers' and workers' representatives, the hours of work on one or more 
days of the week are less than eight, the limit of hours may be exceeded on 
the remaining days of the week by the sanction of the competent public 
authority, or by agreement between such organizations or representatives; 
provided, however, that in no case under the provision of this paragraph 
shall the daily limit of eight hours be exceeded by more than one hour. 

(c) Where persons are employed in shifts it shall be permissible to 
employ persons in excess of eight hours in any one day and forty- 
eight hours in any one week, if the average number of hours over a 
period of three weeks or less does not exceed eight per day and forty- 
eight per week. 

Article 3. The limit of hours of work prescribed in Article 
2 may be exceeded in case of accident, actual or threatened, or 
in case of urgent work to be done to machinery or plant, or in 
case of force majeure, but only so far as may be necessary to 
avoid serious interference with the ordinary working of the 
undertaking. 

Article 4. The limit of hours of work prescribed in Article 
2 may also be exceeded in those processes which are required by 
reason of the nature of the process to be carried on continuously 
by a succession of shifts, subject to the condition that the work- 
ing hours shall not exceed fifty-six in the week on the average. 
Such regulation of the hours of work shall in no case afreet any 
rest days which may be secured by the national law to the work- 
ers in such processes in compensation for the weekly rest day. 

x\rticle 5. In exceptional cases where it is recognized that 
the provisions of Article 2 cannot be applied, but only in such 
cases, agreements between workers' and employers' organiza- 
tions concerning the daily limit of work over a longer period of 
time, may be given the force of regulations, if the Government, 
to which these agreements shall be submitted, so decides. The 
average number of hours worked per week, over the number, of 
weeks covered by any such agreement, shall not exceed forty- 
eight. 

Article 6. Regulations made by public authority shall de- 
termine for industrial undertakings : 

(a) The permanent exceptions that may be allowed in preparatory or 
complementary work which must necessarily be carried on outside the 
limits laid down for the general working of an establishment, or for 
certain classes of workers whose work is essentially intermittent. 

(b) The temporary exception that may be allowed, so that estab- 
lishments may deal with exceptional cases of pressure of work. 

These regulations shall be made only after consultation with 
the organizations of employers and workers concerned, if any 
such organizations exist. These regulations shall fix the maxi- 



384 SELECTED ARTICLES 

mum of additional hours in each instance, and the rate of pay 
for overtime shall not be less than one and one-quarter times 
the regular rate. 

Article 7. Each Government shall communicate to the In- 
ternational Labor Office : 

(a) A list of the processes which are classed as being necessarily 
continuous in character under Article 4; 

(b) Full information as to working of the agreements mentioned 
in Article 5; and 

(c) Full information concerning the regulations made under Article 
6 and their application. 

The International Labor Office shall make an annual report 
thereon to the General Conference of the International Labor 
Organization. 

Article 8. In order to facilitate the enforcement of the pro- 
visions of this Convention, every employer shall be required: 

(a) i To notify by means of the posting of notices in conspicuous 
places in the works or other suitable place, or by such other method 
as may be approved by the Government, the hours at which work begins 
and ends^ and where work is carried on by shifts the hours at which each 
shift begins and ends. These hours shall be so fixed that the duration 
of the work shall not exceed the limits prescribed by this Convention, 
and when so notified they shall not be changed except with such notice 
and in such manner as may be approved by the Government. 

(&) To notify in the same way such rest intervals accorded during 
the period of work as are not reckoned as part of the working hours. 

(c) To keep a record in the form prescribed by law or regulation 
in each country of all additional hours worked in pursuance of Article 
3 and 6 of this Convention. 

It shall be made an offense against the law to employ any 
person outside the hours fixed in accordance with paragraph (a), 
or during the intervals fixed in accordance with paragraph (b). 

Article 9. In the application of this Convention to Japan 
the following modifications and conditions shall obtain : 

(a) The term "industrial undertaking" includes particularly 

The undertakings enumerated in paragraph (a) of Article i ; 

The undertakings enumerated in paragraph (b) of Article i, 
provided there are at least ten workers employed; 

The undertakings enumerated in paragraph (c) of Article t. 
in so far as these undertakings shall be defined as "factories" 
by the competent authority; 

The undertakings enumerated in paragraph (d) of Article i, 
except transport of passengers or goods by road, handling of 
goods at docks, quays, wharves, and warehouses, and transport 
by hand, and 

Regardless of the numbers of persons employed, such of the 
undertakings enumerated in paragraphs (b) and (c) of Article 
1 as may be declared by the competent authority either to be 
highly dangerous or to involve unhealthy processes. 

(b) The actual working hours of persons of fifteen years of age or 
over in any public or private industrial undertaking, or in any branch 
thereof, shall not exceed fifty-seven in the week, except that in the raw- 
silk industry the limit may be sixty hours in the week. 

(c) The actual working hours of persons under fifteen years of age 
in any public or private industrial undertaking, or in any branch thereof 
and of all miners of whatever age engaged in underground work in the 
mines shall in no case exceed forty-eight in the week. 



PROBLEMS OF LABOR 385 

(d) The limit of hours of work may be modified under the con- 
ditions provided for in Articles 2, 3, 4, and 5 of this Convention, but in 
no case shall the length of such modification bear to the length of the 
basic week a proportion greater than that which obtains in those Articles. 

(e) A weekly rest period of twenty-four consecutive hours shall be 
allowed to all classes of workers. 

(/) The provision in Japanese factory legislation limiting its ap- 
plication to places employing fifteen or more persons shall be amended 
so that such legislation shall apply to places employing ten or more 
persons. 

(#) The provisions of the above paragraphs of this Article shall 
be brought into operation not later than 1 July, 1922, except that the 
provisions of Article 4 as modified by paragraph (d) of this Article 
shall be brought into operation not later than 1 July, 1923. 

(h) The age of fifteen prescribed in paragraph (c) of this Article 
shall be raised, not later than 1 July, 1925, to sixteen. 

Article io. In British India the principle of a sixty-hour 
week shall be adopted for all workers in the industries at pres- 
ent, covered by the factory acts administered by the Government 
of India, in mines, and in such branches of railwa} r work as 
shall be specified for this purpose by the competent authority. 
Any modification of this limitation made by the competent au- 
thority shall be subject to the provisions of Articles 6 and 7 of 
this Convention. In other respects this Convention shall not 
apply to India, but further provisions limiting the hours of work 
in India shall be considered at a future meeting of the Gen- 
eral Conference. 

Article ii. The provisions of this Convention shall not 
apply to China, Persia, and Siam, but provisions limiting the 
hours of work in these countries shall be considered at a future 
meeting of the General Conference. 

Article 12. In the application of this Convention to Greece, 
the date at which its provisions shall be brought into operation 
in accordance with Article 19 may be extended to not later than 
1 July, 1923, in the case of the following industrial undertakings : 

(1) Carbon-bisulphide works. 

(2) Acid works, 

(3) Tanneries. 

(4) Paper mills. 

(5) Printing works. 

(6) Sawmills. 

(7) Warehouses for the handling and preparation of tobacco. 

(8) Surface mining. 

(9) Foundries. 

(10) Lime works. 

(11) Dye works. 

(12) Glassworks (blowers). 

(13) Gas works (firemen). 

(14) Loading and unloading merchandise. 

and to not later than 1 July, 1924, in the case of the following- 
industrial undertakings : 

(1) Mechanical industries: Machine shops for engines, sates, scale.-, 
beds, tacks, shells (sporting), iron foundries, bronze foundries, tin shops, 
plating shops, manufactories of hydraulic apparatus. 



386 SELECTED ARTICLES 

(2) Constructional industries : Limekilns, cement works, plasterers' 
shops, tile yards manufactures of bricks and pavements, potteries, marble 
yards, excavating and building work. 

(3) Textile industries: Spinning and weaving mills of all kinds, 
except dye works. 

(4) Food industries: Flour and gristmills, bakeries, macaroni fac- 
tories, manufactories of wines, alcohol, and drinks, oil works, breweries, 
manufactories of ice and carbonated drinks, manufactories of confec- 
tioners' products and chocolate, manufactories of sausages and preserves, 
slaughterhouses, and butcher shops. 

(5) Chemical industries: Manufactories of synthetic colors, glass- 
works (except the blowers), manufactories of essence of turpentine and 
tartar, manufactories of oxygen and pharmaceutical products, manufac- 
tories of flaxseed oil, manufactories of glycerine, manufactories of cal- 
cium carbide, gas works (except the firemen). 

(6) Leather industries: Shoe factories, manufactories of leather 
goods. 

(7) Paper and printing industries: Manufactories of envelopes, 
record books, boxes, bags, bookbinding, lithographing, and zinc-engraving 
shops. 

(8) Clothing industries: Clothing shops, underwear and trimmings, 
workshops for pressing, workshops for bed coverings, artificial flowers, 
feathers, and trimmings, hat and umbrella factories. 

(9) Woodworking industries: Joiners' shops coopers' sheds, wagon 
factories, manufactories of furniture and chairs, picture-framing establish- 
ments, brush and broom factories. 

(10) Electrical industries: Power houses, shops for electrical in- 
stallations. 

(11) Transportation by land: Employees on railroads and street 
cars, firemen, drivers, and carters. 

Article 13. In the application of this Convention to Rou- 
mania the date at which its provisions shall be brought into 
operation in accordance with x^rticle 19 may be extended to not 
later than 1 July, 1924. 

Article 14. The operation of the provisions of this Con- 
vention may be suspended in any country by the Government in 
the event of war or other emergency endangering the national 
safety. 

Article 15. The formal ratifications of this Convention, 
under the conditions set forth in Part XIII of the treaty of 
Versailles of 28 June, 1919, and of the treaty of St. Germain 
of 10 September, 1919, shall be communicated to the Secretary 
General of the League of Nations for registration. 

Article 16. Each Member which ratifies this Convention en- 
gages to apply it to its colonies, protectorates and possessions 
which are not fully self-governing: 

(a) Except where owing to the local conditions its provisions are 
inapplicable; or 

(b) Subject to such modifications as may be necessary to adapt its 
provisions to local conditions. 

Each member shall notify to the International Labor Office 
the action taken in respect of each of its colonies, protectorates, 
and possessions which are not fully self-governing. 

Article 17. As soon as the ratifications of two Members 
of the International Labor Organization have been registered 



PROBLEMS OF LABOR 387 

with the Secretariat, the Secretary General of the League of 
Nations shall so notify all the Members of the International 
Labor Organization. 

Article 18. This Convention shall come into force at the 
date on which such notification is issued by the Secretary Gen- 
eral of the League of Nations, and it shall then be binding only 
upon those Members which have registered their ratification 
with the Secretariat. Thereafter this Convention will come into 
force for any other Member, at the date on which its ratification 
is registered with the Secretariat. 

Article 19. Each Member which ratifies this Convention 
agrees to bring its provisions into operation not later than 1 July, 
1921, and to take such action as may be necessary to make these 
provisions effective. 

Article 20. A Member which has ratified this Convention 
may denounce it after the expiration of ten years from the date 
on which the Convention first comes into force, by an act com- 
municated to the Secretary of the League of Nations for regis- 
tration. Such denunciation shall not take effect until one year 
after the date on which it is registered with the Secretariat. 

x\rticle 21. At least once in ten years the Governing Body 
of the International Labor Office shall present to the General 
Conference a report on the working of this Convention, and 
shall consider the desirability of placing on the agenda of the 
Conference the question of its revision or modification. 

Article 22. The French and English texts of this Conven- 
tion shall both be authentic. 

Draft Convention Concerning Unemployment 

Article i. Each Member which ratines this Convention 
shall communicate to the International Labor Office, at inter- 
vals as short as possible and not exceeding three months, all 
available information, statistical or otherwise, concerning unem- 
ployment, including reports on measures taken or contemplated 
to combat unemployment. Whenever practicable, the informa- 
tion shall be made available for such communication not later 
than three months after the end of the period to which it relates. 

Article 2. Each Member which ratifies this Convention 
shall establish a system of free public employment agencies 
under the control of a central authority. Committees, which 
shall include representatives of employers and of workers, shall 
be appointed to advise on matters concerning the carrying on of 
these agencies. 



388 SELECTED ARTICLES 

Where both public and private free employment agencies 
exist, steps shall be taken to coordinate the operations of such 
agencies on a national scale. 

The operations of the various national systems shall be co- 
ordinated by the International Labor Office in agreement with 
the countries concerned. 

Article 3. The Members of the International Labor Organ- 
ization which ratify this Convention and which have established 
systems of insurance against unemployment shall, upon terms 
being agreed between the Members concerned, make arrange- 
ments whereby workers belonging to one Member and working 
in the territory of another shall be admitted to the same rates 
of benefit of such insurance as those which obtain for the 
workers belonging to the latter. 

Recommendation Concerning Unemployment 

The General Conference of the International Labor Organi- 
zation of the League of Nations. 

Having been convened at Washington by the Government of the 
United States of America on the 29th day of October, 1919 and 

Having decided upon the adoption of certain proposals with regard 
to the "question of preventing or providing against unemployment," which 
is the second item in the agenda for the Washington meeting of the 
Conference, and 

Having determined that these proposals shall take the form of a 
recommendation, 

Adopts the following Recommendation, to be submitted to the 
Members of the International Labor Organization for con- 
sideration with a view to effect being given to it b} r national 
legislation or otherwise, in accordance with the Labour Part of 
the Treaty of Versailles of 28 June, 1919, and of the Treaty of 
St. Germain of 10 September, 1919 : 

I. The General Conference recommends that each Member 
of the International Labor Organization take measures to prohibit 
the establishment of employment agencies which charge fees or 
which carry on their business for profit. Where such agencies 
already exist, it is further recommended that they be permitted 
to operate only under Government licenses, and that all prac- 
ticable measures be taken to abolish such agencies as soon as 
possible. 

II. The General Conference recommends to the Members 
of the International Labor Organization that the recruiting of 
bodies of workers in one country with a view to their employ- 
ment in another country should be permitted only by mutual 
agreement between the countries concerned and after consul- 



PROBLEMS OF LABOR 389 

tation with employers and workers in each country in the in- 
dustries concerned. 

III. The General Conference recommends that each Mem- 
ber of the International Labor Organization establish an effec- 
tive system of unemployment insurance, either through a Gov- 
ernment system or through a system of Government subven- 
tions to associations whose rules provide for the payment of 
benefits to their unemployed members. 

IV. The General Conference recommends that each Mem- 
ber of the International Labor Organization coordinate the 
execution of all work undertaken under public authority, with 
a view to reserving such work as far as practicable for periods 
of unemployment and for districts most affected by it. 

Recommendation Concerning Reciprocity of Treat- 
ment of Foreign Workers 

The General Conference recommends that each Member of 
the International Labor Organization shall, on condition of rec- 
iprocity and upon terms to be agreed between the countries 
concerned, admit the foreign workers (together with their fam- 
ilies) employed within its territory, to the benefit of its laws 
and regulations for the protection of its own workers, as well 
as to the right of lawful organization as enjoyed by its own 
workers. 

Draft Convention Concerning the Employment of 
Women Before and After Childbirth 

Article i. For the purpose of this Convention, the term 
''industrial undertaking" includes particularly: 

(a) Mines, quarries, and other works for the extraction of minerals 
from the earth. 

(b) Industries in which articles are manufactured, altered, cleaned, 
repaired, ornamented, finished, adapted for sale, broken up or demolished, 
or in which materials are transformed; including shipbuilding, and the 
generation, transformation, and transmission of electricity or motive 
power of any kind. 

(c) Construction, reconstruction, maintenance, repair, alteration, or 
demolition of any building, railway, tramway, harbor, dock, pier, canal, 
inland waterway, road, tunnel, bridge, viaduct, sewer, drain, well, tele- 
graphic or telephonic installation, electrical undertaking, gas work, water 
work, or other work of construction, as well as the preparation for or 
laying the foundation of any such work or structure. 

(d) Transport of passengers or goods by road or rail, including the 
handling of goods at docks, quays, wharves, and warehouses, but ex- 
cluding transport by hand. 

For the purpose of this Convention, the term "commercial 
undertaking" includes any place where articles are sold or where 
commerce is carried on. 



390 SELECTED ARTICLES 

The competent authority in each country shall define the 
line of division which separates industry and commerce from 
agriculture. 

Article 2. For the purpose of this Convention, the term 
"woman" signifies any female person, irrespective of age or na- 
tionality, whether married or unmarried, and the term "child" 
signifies any child whether legitimate or illegitimate. 

Article 3. In any public or private industrial or commercial 
undertaking, or in any branch thereof, other than an undertak- 
ing in which only members of the same family are employed, 
a woman — 

(a) Shall not be permitted to work during the six weeks following 
her confinement. 

(b) Shall have the right to leave her work if she produces a medical 
certificate stating that her confinement will probably take place within 
six weeks. 

(c) Shall, while she is absent from her work in pursuance of para- 
graphs (a) and (b), be paid benefits sufficient for the full and healthy 
maintenance of herself and her child, provided either out of public funds 
or by means of a system of insurance, the exact amount of which shall 
be determined by the competent authority in each country, and as an addi- 
tional benefit shall be entitled to free attendance by a doctor or certified 
midwife. No mistake of the medical adviser in _ estimating the date of 
confinement shall preclude a woman from receiving these benefits from 
the date of the medical certificate up to the date on which the confine- 
ment actually takes place. 

(d) Shall in any case, if she is nursing her child, be allowed half 
an hour twice a day during her working hours for this purpose. 

Article 4. Where a woman is absent from her work in 
accordance with paragraphs (a) or (b) of Article 3 of this Con- 
vention, or remains absent from her work for a longer period 
as a result of illness medically certified to arise out of pregnancy 
or confinement and rendering her unfit for work, it shall not be 
lawful, until her absence shall have exceeded a maximum period 
to be fixed by the competent authority in each country, for her 
employer to give her notice of dismissal during such absence, 
nor to give her notice of dismissal at such a time that the notice 
would expire during such absence. 

Draft Convention Concerning Employment of Women 
During the Night 

Article i. For the purpose of this Convention, the term 
"industrial undertaking" includes particularly: 

(a) Mines, quarries, and other works for the extraction of minerals 
from the earth. 

(b) Industries in which articles are manufactured, altered cleaned, 
repaired, ornamented, finished, adapted for sale, broken up or demolished, 
or in which materials are transformed; including shipbuilding, and the 
germination, transformation, and transmission of electricity or motive 
power of any kind. 

(c) Construction, reconstruction, maintenance, repair, alteration, or 



PROBLEMS OF LABOR 391 

demolition of any building, railway, tramway, harbor, dock, pier, canal, 
inland waterway, road, tunnel, bridge, viaduct, sewer, drain, well, telegraphic 
or telephonic installation, electrical undertaking, gas work, water work, or 
other work of construction, as well as the preparation for or laying the 
foundations of any such work or structure. 

The competent authority in each country shall define the 
line of division which separates industry from commerce and 
agriculture. 

Article 2. For the purpose of this Convention, the term 
"night" signifies a period of at least eleven consecutive hours, 
including the interval between ten o'clock in the evening and five 
o'clock in the morning. 

In those countries where no Government regulations as yet 
applies to the employment of women in industrial undertakings 
during the night, the term "night" may provisionally, and for a 
maximum period of three years, be declared by the Government 
to signify a period of only ten hours, including the interval 
between ten o'clock in the evening and five o'clock in the morn- 
ing. 

Article 3. Women without distinction of age shall not be 
employed during the night in any public or private industrial 
undertaking, or in any branch thereof, other than an undertaking 
in which only members of the same family are employed. 

Article 4. Article 3 shall not apply: 

(a) In cases of force majeure, when in any undertaking 
there occurs an interruption of work which it was impossible to 
foresee, and which is not of a recurring character. 

(b) In cases where the work has to do with raw materials 
or materials in course of treatment which are subject to rapid 
deterioration, when such night work is necessary to preserve 
the said materials from certain loss. 

Article 5. In India and Siam, the application of Article 
3 of this Convention may be suspended by the Government in 
respect to any industrial undertaking, except factories as defined 
by the national law. Notice of every such suspension shall be 
filed with the International Labor Office. 

Article 6. In industrial undertakings which are influenced 
by the seasons and in all cases where exceptional circumstances 
demand it, the night period may be reduced to ten hours on sixty 
days of the year. 

Article 7. In countries where the climate renders work by 
day particularly trying to the health, the night period may be 
shorter than prescribed in the above articles, provided that com- 
pensatory rest is accorded during the day. 



392 SELECTED ARTICLES 

Recommendation Concerning the Protection of 
Women and Children Against Lead Poisoning 

The General Conference recommends to the Members of the 
International Labor Organization that in view of the danger 
involved to the function of maternity and to the physical de- 
velopment of children, women and young persons under the 
age of eighteen years be excluded from employment in the fol- 
lowing processes : 

(a) In furnace work in the reduction of zinc or lead ores. 

(b) in the manipulation, treatment or reduction of ashes contain- 
ing lead, and in the desilverizing of lead. 

(c) In melting lead or old zinc on a large scale. 

(d) In the manufacture of solder or alloys containing more than 
ten per cent of lead. 

(e) In the manufacture of litharge, massicot, red lead, white lead, 
orange lead, or sulphate, chromate or silicate (frit) of lead. 

(/) In mixing and pasting in the manufacture or repair of electric 
accumulators. 

(g) In the cleaning of workrooms where the above processes are 
carried on. 

It is further recommended that the employment of women 
and young persons under the age of eighteen years in processes 
involving the use of lead compounds be permitted only subject 
to the following conditions : 

(a) Locally applied exhaust ventilation, so as to remove dust and 
fumes at the point of origin. 

(b) Cleanliness of tools and workrooms. 

(c) Notification to Government authorities of all cases of lead 
poisoning and compensation therefor. 

(d) Periodic medical examination of the persons employed in such 
processes. 

(e) Provision of sufficient and suitable cloakroom, washing, and 
mess-room accommodation, and of special protective clothing. 

(/) Prohibition of bringing food or drink into work rooms. 

It is further recommended that in industries where soluble 
lead compounds can be replaced by non-toxic substances, the 
use of soluble lead compounds should be strictly regulated. 

For the purpose of this Recommendation, a lead compound 
should be considered as soluble if it contains more than five per 
cent of its weight (estimated as metallic lead) soluble in a 
quarter of one per cent solution of hydrochloric acid. 

Draft Convention Fixing the Age for Admission 
of Children to Industrial Employment 

Article i. For the purpose of this Convention, the term 
"industrial undertaking" includes particularly : 

(a) Mines, quarries and other works for the extraction of minerals 
from the earth. 



PROBLEMS OF LABOR 393 

Co) Industries in which articles are manufactured, altered, cleaned, 
repaired, ornamented, finished adapted for sale, broken up or demolished, 
or in which materials are transformed; including shipbuilding, and the 
generation, transformation, and transmission of electricity and motive 
power of all kinds. 

(c) Construction, reconstruction, maintenance, repair, alteration or 
demolition of any building, railway, tramway, haroor, dock, pier, canal, 
inland waterway, road, tunnel, bridge, viaduct, sewer, drain, well, telegraphic 
or telephonic installation, electrical undertaking, gas work, water work, 
or other work of construction, as well as the preparation for or laying 
the foundations of any such work or structure. 

(d) Transport of passengers or < goods by road or rail or waterway, 
including the handling of goods at docks, quays, wharves, and ware- 
houses, but excluding transport by hand. 

The competent authority in each country shall define the 
line of division which separates industry from commerce and 
agriculture. 

Article 2. Children under the age of fourteen years shall 
not be employed or work in any public or private industrial 
undertaking, or in any branch thereof, other than an undertak- 
ing in which only members of the same family are employed. 

Article 3. The provisions of article 2 shall not apply to 
work done by children in technical schools, provided that such 
work is approved and supervised by public authority. 

Article 4. In order to facilitate the enforcement of the 
provisions of this Convention, every employer in an industrial 
undertaking shall be required to keep a register of all persons 
under the age of sixteen years employed by him, and of the 
dates of their births. 

Article 5. In connection with the application of this Con- 
vention to Japan, the following modifications of article 2 may 
be made : 

(a) Children over twelve years of age may be admitted into em- 
ployment if they have finished the course in the elementary school; 

(b) As regards children between the ages of twelve and fourteen 
already employed, transitional regulations may be made. 

The provision in the present Japanese law admitting chil- 
dren under the age of twelve years to certain light and easy 
employments shall be repealed. 

Article 6. The provisions of article 2 shall not apply to 
India, but in India children under twelve years of age shall not 
be employed, 

(a) In manufactories working with power and employing more than 
ten persons; 

(fe) In mines, quarries, and other works for the extraction of 
minerals from the earth; 

(c) In the transport of passengers or goods or mails, by rail, or 
in the handling of goods at docks, quays, and wharves, but excluding 
transport by hand. 



394 SELECTED ARTICLES 

Draft Convention Concerning the Night Work of 
Young Persons Employed in Industry 

Article i. For the purpose of this Convention, the term 
"industrial undertaking" includes particularly: 

(a) Mines, quarries, and other works for the extraction of minerals 
from the earth. 

(b) Industries in which articles are manufactured, altered, cleaned, 
repaired, ornamented, finished, adapted for sale, broken up, or demolished, 
or in which materials are transformed; including shipbuilding, and the 
generation transformation and transmission of electricity or motive power 
of any kind. 

(c) Construction, reconstruction, mainteance, repair, alteration, or 
demolition of any building, railway, tramway, harbor, dock, pier, canal, 
inland waterway, road, tunnel, bridge, viaduct, sewer, drain, well, tele- 
graphic or telephonic installation, electrical undertaking, gas work, water 
work, or other work of construction as well as the preparation for or 
laying the foundations of any such work or structure. 

(d) Transport of passengers or goods by roads or rail, including 
the handling of goods at docks, quays, wharves, and warehouses, but 
excluding transport by hand. 

The competent authority in each country shall define the line 
of division which separates industry from commerce and agri- 
culture. 

Article 2. Young persons under eighteen years of age shall 
not be employed during the night in any public or private in- 
dustrial undertaking, or in any branch thereof, other than an 
undertaking in which only members of the same family are em- 
ployed, except as hereinafter provided for. 

Young persons over the age of sixteen may be employed 
during the night in the following industrial undertakings on 
work which by reason of the nature of the process, is required 
to be carried on continuously day and night: 

(a) Manufacture of iron and steel; processes in which reverbera- 
tory or regenerative furnaces are used, and galvanizing of sheet metal or 
wire (except the pickling process). 

(b) Glass works. 

(c) Manufacture of paper. 

(d) Manufacture of raw sugar. 

(e) Gold mining reduction work. 

Article 3. For the purpose of this Convention, the term 
"night" signifies a period of at least eleven consecutive hours, 
including the interval between ten o'clock in the evening and 
five o'clock in the morning. 

In coal and lignite mines work may be carried on in the 
interval between ten o'clock in the evening and five o'clock in 
the morning, if an interval or ordinary fifteen hours, and in 
no case of less than thirteen hours, separates two periods of 
work. 



PROBLEMS OF LABOR 395 

Where night work in the baking industry is prohibited for 
all workers, the interval between nine o'clock in the evening and 
four o'clock in the morning may be substituted in the baking in- 
dustry for the interval between ten o'clock in the evening and 
live o'clock in the morning. 

In those tropical countries in which work is suspended dur- 
ing the middle of the day, the night period may be shorter than 
eleven hours if compensatory rest- is accorded during the day. 

Article 4. The provisions of Articles 2 and 3 shall not apply 
to the night work of young persons between the ages of sixteen 
and eighteen years in cases of emergencies which could not have 
been controlled or foreseen, which are not of a periodical char- 
acter, and which interfere with the normal working of the in- 
dustrial undertaking. 

Article 5. In the application of this Convention to Japan, 
until 1 July, 1925, Article 2 shall apply only to young persons 
under fifteen years of age and thereafter it shall apply only to 
young persons under sixteen years of age. 

Article 6. In the application of this Convention to India, 
the term "industrial undertakings" shall include only "factories" 
as defined in the Indian Factory Act, and Article 2 shall not 
apply to male young persons over fourteen years of age. 

Recommendation Concerning the Establishment 
of Government Health Services 

The General Conference recommends that each Member of 
the International Labor Organization which has not already 
done so should establish as soon as possible, not only a system 
of efficient factory inspection, but also in addition thereto a 
Government service especially charged with the duty of safe- 
guarding the health of the workers, which will keep in touch 
with the International Labor Office. 

Recommendation Concerning the Application of 
the Berne Convention of 1906 on the Prohi- 
bition of the Use of White Phosphorus in 
the Manufacture of Matches 

The General Conference recommends that each Member of 
the International Labor Organization, which has not already 
done so, should adhere to the International Convention adopted 
at Berne in 1906 on the prohibition of the use of white phos- 
phorus in the manufacture of matches. 



3Q6 selected articles 

Recommendation Concerning the Prevention of Anthrax 

The General Conference recommends to the Members of the 
International Labor Organization that arrangements should be 
made for the disinfection of wool infected with anthrax spores, 
either in the country exporting such wool or if that is not prac- 
ticable at the port of entry in the country importing such wool. 



BRINGING ABOUT INDUSTRIAL PEACE 1 

There is no automatic method of bringing about indus- 
trial peace; no panacea can be proposed. The Socialists pro- 
pose a panacea. They consider that the conflict of capital and 
labor springs from the historical fact of private property, and 
that if private property, is abolished and all property made com- 
mon, then there will be harmony. There will be no clashes and 
no conflict. They would abolish conflict and bring about in- 
dustrial peace by abolishing private property, but in order to 
accomplish that result, they must also abolish liberty. As long 
as there is liberty there will be strikes, for a strike is nothing 
more nor less than liberty to stop work and to wait for a bar- 
gain — it is a process of negotiation — it is a scheme of withhold- 
ing your property until you can agree on the terms of exchange. 

The principal new thing about this situation in modern in- 
dustry is that it is conducted on a large scale — much more than 
we have ever known before — and that is because there is more 
liberty than has ever been known before. It has only been two 
generations that the workman, under our constitution, has been 
free. We have a new situation. The liberty of labor is a new 
phenomenon, and it should not be surprising that we have not 
learned either to deal w r ith the institution of property or with 
the liberty of the working man. They are both new problems. 

I do not propose to offer any panacea because it is im- 
possible to offer any one solution. I would, however, mention 
two things which seem to me impossible in the direction of a 
solution of labor problems or in bringing about industrial peace. 
Industrial peace cannot be brought about by rough methods. 
We have gone through considerable discussion of compulsory 
arbitration, and there has been a considerable reliance on the 
injunction and on threats. These rough methods are breaking 

1 By John R. Commons. Address, before Conference of Employment 
Managers. December 13, 19 19. Proceedings of the National Association 
of Employment Managers. 



PROBLEMS OF LABOR 397 

down. We may put the leaders in jail, we may prevent them 
from using the mails and we may tie up their funds, but if be- 
neath what the leaders are doing there is a real grievance, a 
real unrest and a mass movement, we cannot permanently sup- 
press it. The rough method has about reached its limit. It has 
failed in the different countries where it has been tried, and 
recent events in this country seem to prove that we cannot re- 
sort to the rough method of bringing about industrial peace. 

Then there is another method which has been resorted to 
more or less, the method of misrepresentation. I think the 
greatest offender in the method of misrepresentation is the 
United States Steel Corporation. They flooded this country 
with propaganda of Bolshevism as though the laboring people 
of the United States who are demanding the abolition of the 
twelve-hour day and the seven-day week, were animated by the 
desire of taking possession not only of the factories of the Steel 
Corporation but of all factories. xA.pparently, they succeeded in 
that propaganda and misrepresentation. You find throughout 
the country, not only an unrest amongst laborers but a decided 
unrest amongst employers. Employers have become easy-marks 
— anybody who has a panacea can come to an employer and lift 
$100 out of his pocket-book by offering him a remedy against 
Bolshevism. The unrest which has been stirred up amongst 
employers by the Steel Corporation in its wonderful propaganda 
is a menace to the industrial peace of the country. Neither 
rough methods nor misrepresentation will permanently bring 
about industrial peace. 

If we cannot rely upon these methods of the past, what is 
going to be the method and what can we offer as a remedy in 
bringing about industrial peace? In my judgment, the method 
is one, not of a year or two years, but of many years. It is the 
method of prevention. We must investigate the conditions 
which cause this industrial unrest and we must prepare in ad- 
vance to remove the conditions which cause conflict to waken up. 

Last February the Administration at Washington might have 
known what was going to happen in the coal-mining industry. 
The Administration had all of the means of knowing how many 
hours' work the men were getting in the week; they had the 
means of knowing that after the Armistice was signed employ- 
ment fell off; that during the winter months and on through 
the summer, the men were not working half time, or two-thirds 
of the time; that in the winter they were compelled to sell their 
Liberty Bonds ; they were compelled to eat up thir savings and 



398 SELECTED ARTICLES 

there was great suffering in many parts of the mining districts. 
Anyone who attended that convention of the mine workers' 
opinion, could not for a minute conceive that their unrest was 
ers coming up out of the ground in one great solid, unanimous 
opinion, could not for a minute conceive that their unrest was 
the work only of agitators and leaders. They were not officials, 
they were not the salaried leaders defending their jobs. They 
were the actual mine workers sent there by the local unions to 
protest against conditions. 

They made a great statistical blunder and perpetrated an eco- 
nomic fallacy. Their statistical blunder, owing to the lack of 
proper statistical information, led them to ask for an increase 
of 60% in their wages. They figured it cut accurately, accord- 
ing to the light which they had. Their statistician had figured 
that their cost of living had gone up about 104%, whereas, as a 
matter of fact, it had gone up only 80% — they had taken whole- 
sale price rather than retail pric s. They figured their wages 
had gone up 44% and they wanted another 60%, and, added to 
the 44% on the 1914 basis, that would have brought them up 
exactfy even with the cost of living. 

Their economic fallacy was based on the idea that by re- 
stricting the hours of labor to six they could force industry 
to equalize employment throughout the year. The impression 
was generally spread over the country that what they intended 
to do was to restrict the output by cutting the hours from eight 
to six. We all know now that what they were really trying to 
do was to distribute the work evenly through out the year. A 
man working in a coal mine often does not know until the 
whistle blows in the evening whether there will be work to- 
morrow or not. When he goes to work in the morning he 
does not know whether he will have two, three, four, five, or 
eight hours of work. Living in this state of uncertainty, not 
simply for the year, but for twenty or thirty years, the mine 
worker has been brought up on the conviction that each time he 
reduces the hours of labor, he forces the employer to distribute 
the work more evenly. He is not asking for less work, he is 
asking for steady work. 

The Administration at Washington should have known these 
conditions and circumstances. They had the correct statistical 
information, they knew the conditions in the industry, and at 
the time when the Administration lifted the ban on the oper- 
ators' price of coal, they should have negotiated with the oper- 
ators to bring about an adjustment of wages so as to meet ac- 
curately the cost of living. 



PROBLEMS OF LABOR 399 

This fluctuation of prices, this changing cost of living, has 
been going on for an entire century. It is not a new phenom- 
enon. One hundred years ago, at the close of the Napoleonic 
wars, we had the same situation. We had it again in the Thir- 
ties owing to wildcat banking at that time. We had it during 
the Civil War, and now we have it repeated. We have had in 
all of these periods quite the same crude explanation of the 
facts — the rise of prices has always been charged up to monopo- 
lies and profiteering. It has now been charged up to restric- 
tions by the laborers. It may be true, and no doubt it is, that 
there is profiteering and that there is "laying down" on the job 
by wage earners, but if we try to figure how much influence 
either profiteering or restrictions by labor has on the elevation 
of prices, I think we will have to conclude that if we could stop 
all of the profiteering and stop all of the restrictions by labor, 
it would not affect the total result very materially. Profiteering 
and restrictions are mainly results, not causes, of rising prices. 
The high cost of living is something that neither the employer 
nor the employee can prevent. It does not come from anything 
under the power of capital and labor to overcome, and yet it is 
the one great cause of uncertainty and unrest, and has been for 
a whole century. 

The fluctuation of currency is the greatest of all the labor 
problems. It throws a red brick continually into capital and 
labor. The first great method of importance in bringing about 
industrial peace is the stabilizing of the dollar. If we can have 
a system of currency in which the great fluctuations which have 
been occurring in all these years could be stabilized, we would 
do more to stabilize industry, to bring about industrial peace, 
than any other one thing. In times of rising prices we have re- 
strictions, aggressive movements; in times of falling prices, 
we have unemployment, bankruptcy and depression. The whole 
situation is rendered unstable and we are living continuously in 
a period of uncertainty. 

I know of no way of reaching that question, which to me 
seems the most fundamental of all, except that remedy proposed 
by Irving Fisher, of stabilizing the dollar. The supply of gold 
and paper money and credit has increased faster than the sup- 
ply of commodities and the productions of labor. If that sup- 
ply of gold and paper money and credit increases faster than 
the supply of commodities, inevitably we shall have a general 
increase in prices. The world has seen again this great inflation 



4 oo SELECTED ARTICLES 

of the paper money of the world, of the credit system, of the 
banking system. The gold of Europe has come to this country 
and not until the gold begins to go back to Europe, not until 
Europe is rehabilitated, not until we can lend credit to build up 
Europe again, will we begin to get back to a stable condition. 

It would perhaps be even more disastrous if we should figure 
on having in the future a return of prices to the level preced- 
ing the war. It is bad enough to have them go up as they have 
been going, but it will be even worse to have them go back 
again to the level of 1914. All of the enormous debts which 
have been accumulated have been incurred on a fifty-cent doilar. 
It would certainly depress the entire civilized world if we should 
try to pay off those debts on a dollar which is worth one hun- 
dred cents. It is far better to contemplate a perpetual high level 
of prices, a continuous and new basis, rather than go through 
a period of depression like that which followed the Civil War 
and the panic of 1873 down until 1879. 

It is better for the world to get together on some plan like 
that proposed by Irving Fisher. If the dollar is unstable, the 
way to stabilize it is to change the amount of gold that is in the 
dollar. If prices go up, that means that the dollar is getting 
cheap — that means we ought to put more gold into it, and that 
will tend to keep the general level of prices from rising. If 
prices are going down, the dollar is getting dear, and we need 
to take a little of the gold out of it. Convert all of the gold into 
bullion ; change the amount of gold in the dollar every month 
according to the movement of prices ; check a too-rapid increase 
and restrain the decrease in prices by changing the amount of 
gold in the dollar, and then circulate the bullion certificates, 
which we are practically accustomed to, instead of the gold it- 
self. This program of stabilizing the dollar is the most funda- 
mental of all problems that industry can consider. We are not 
yet seriously considering it but it lies underneath all of our 
problems. 

Yet we know that a remedy of this kind will not be coming 
very soon. Consequently, the best that can be done is for em- 
ployers and employees to adjust themselves to that situation. 
We must adjust ourselves, because capital and labor cannot pre- 
vent this fluctuation. 

I know of only one great constructive plan in this country 
(there may be others) on a national scale which has attempted 
to bring about industrial peace by meeting the situation of the 
currency, and that is the plan which is now being worked out in 



PROBLEMS QF LABOR 401 

the book and job printing business with the labor organizations. 
With this increased cost of living, the printing business did not 
raise wages. They had their agreements that had not expired 
and did not provide for raising wages. But in two or three 
places in the country, in New York, Chicago and Seattle, the 
local unions violated their agreements and went after the in- 
creased wages by direct action. And, although the employing 
printers contended that they could, not pay the increase, yet 
when they came to it, they not only paid the increase but they 
paid more than the increased cost of living. The only places in 
the United States where labor actually secured, in the book and 
job printing business, an increase in wages corresponding to the 
increase in the cost of living, was where the local unions defied 
their own national unions. What a lesson that was to labor in 
the United States ! The only way we can keep up with the cost 
of living is by violating our agreements, by resorting to meth- 
ods which we have promised not to adopt — by defying our own 
organizations. 

Consequently, we find that the book and job printing busi- 
ness has come together on a national scale and is in the process 
of adopting the principle that employers will not wait until de- 
mands and strikes are upon them, but will automatically change 
the level of wages as the changing price curve moves up or 
down. Every six months, or at periodic intervals, a change is 
proposed to be made throughout the entire United States, on 
the initiative of the employer— not waiting for latter to make 
the demand, and thus head off this unrest in the localities. In 
doing that, the employing printers throughout the United States 
for the first time have joined with the national organizations 
of labor, where their interests are alike, and we see on a new 
national scale, the largest expansion of scientific management, 
capital and labor combining to look ahead to the future, in order 
to prevent industrial conflict by remedying the conditions in 
advance. 

Of course, we have the objection that if an increase in wages 
causes prices to go up, and if an increase in prices provokes a 
further demand on the part of labor for wages to go up, we 
have that vicious circle. But that vicious circle cannot be 
avoided as long as we have inflation of currency. If we had a 
stabilized dollar, no matter what the relations are, the prices and 
wages would be stabilized in accordance with the general level of 
the price curve. It is a mistaken view that it is this pyramiding 
of wages and prices that keeps prices up. It is not the pyramid- 



4 02 SELECTED ARTICLES 

ing of wages and prices ! It is the inflation of the world's cur- 
rency, and no matter what adjustment might be made between 
employers and laborers, a correction of the currency of the 
world could stabilize prices and prevent the need of this pyra- 
miding. That is the first and most important fundamental con- 
dition to be recognized in the conflict of capital and labor, as it 
appears to me. 

What about restrictions of output? Everybody knows that 
in good times working people "lay down" on the job, no matter 
whether organized workers or not. People do not work as hard 
in good times as they do in hard times. We have the curious 
paradox that in good times when we ought to increase the out- 
put, labor restricts the output, and in hard times, when we don't 
want people to work so hard and increase the supply of produc- 
tion, then is when they work the hardest. A business man does 
not conduct his business in that way. In good times, when prices 
are going up, he tries to increase his output; in hard times, 
when prices are falling, he tries to restrict his output — he does 
not buy more than he can sell. In other words, labor works just 
the opposite of business. In good times, when prices are up, 
then is when labor "lays down" on the job and refuses to in- 
crease the output and keep up the supply. In hard times, when 
the demand has fallen off, then is when labor works the hardest 
and turns out the most production. It surely seems that we have 
been going on a wrong hypothesis in dealing with labor. It 
works out all right in dealing with marketing and commodities, 
but labor seems to work just the opposite. 

We have been going on the theory that in order to get effi- 
ciency, in order to get output, in order to get laborers to work, 
there must be some kind of a penalty held over the working man 
— the penalty of unemployment, the penalty of being discharged 
if he does not work, if he does not do his duty, if he is not on 
his job. It is then that he suffers the penalty of being dis- 
charged from his job. Our method has been the rough method 
of disciplining labor by the penalty of unemployment. 

That penalty does not work in good times ; it works too 
much in hard times. In good times, the workman is not afraid 
of unemployment. What's the use? If he is discharged, he can 
go across the street and get another job. In hard times, when 
we don't want so much produced, then he works hard because 
he is afraid of unemployment, and cannot go across the street 
and get another job. The psychology of labor, both in good and 
in hard times, is fundamentally the psychology of a class of 



PROBLEMS OF LABOR 403 

people whose life is insecure, who are subject to rough methods 
of discipline. We cannot understand the problem of dealing 
with labor unless we understand that fundamental fact of in- 
security of employment. It is just as vicious in good times as it 
is in hard times. In good times, the working man's high wages 
are an injury to him — he gets too much money and he does not 
know what to do with it, and spends it extravagently— burns it 
up— and when the hard times comes, he has nothing to fall back 
upon. The fluctuation of earnings — great earnings in good 
times, falling off in hard times — is demoralizing to the character 
of working people. 

If we have to depend upon the rough method of discharge, 
for getting efficiency, then we are going to keep labor continually 
unstable and uncertain and the character of the working man 
will not rise to the occasion of modern industry. 

Modern capitalism is not based upon the ownership of 
physical things. We might see much of our machinery and our 
buildings destroyed by earthquake or war, but we all know that 
if we retain the credit system it will not be very long until all 
of our machinery and buildings are restored. We usually con- 
sider that the production of wealth is brought about by the union 
of capital, of management and labor. The capital is the phys- 
ical machinery and the tools ; the management is the organizing 
element ; and labor produces the physical product. The three 
must, indeed, be combined, but the greatest instrument of pro- 
duction, the thing that really produces modern wealth, is not 
physical things, is not labor, is not management — it is confidence 
in the future — it is a credit system based on the expectation of 
industrial continuity, an expectation that debts will be paid. The 
capitalistic system is security of expectations. If we could not 
offer security to the investor, we might still have production 
of wealth. Physical things, management and labor might go on 
producing wealth, but you know how much wealth could be pro- 
duced if it were not for our credit system. The production of 
wealth would fall back to what it was in Colonial times — no- 
body could ship his product to anybody else, and we would not 
trust one another. Capital is based upon security of expecta- 
tions. The investor has confidence that his investment will be 
returned to him, that promises will be kept. That is the great 
producing factor in modern industry. 

Now, capitalism is to blame because it has not offered, as 
yet, to labor that security of the job which it has offered to the 
investors in the security of their investments. Capitalism is 



4 04 SELECTED ARTICLES 

threatened because it has not furnished the working people a 
similar security to that which it has furnished to the investors. 
The working men are getting the idea throughout the world, 
that the elements that produce wealth are the working men and 
the management, and we have the Plumb plan, in which two 
million workers in the United States come forth to oust the 
credit system and let simply management and labor produce the 
wealth of the country. They would destroy the thing upon 
which the credit of the railroads is built, because they think that 
the producing elements are management and labor. 

Well, that is much the same idea that they have in Russia 
and that is the fundamental notion of modern laboring people 
spreading throughout the world. They do not appreciate that 
modern capitalism is based on faith in the future ; they have 
not themselves been given that same security. Capitalism to 
them is autocracy and insecurity. They have tried to get se- 
curity by rough methods. Trade unionism, closed shop, union 
shop, and so on, are their methods of obtaining security of the 
job. Not until the capitalistic system, not until the great finan- 
cial interests that control this country, have learned that it is 
just as important to furnish security for the job as it' is to 
furnish security for the investment, will we have a permanent 
provision for industrial peace. 

We have only begun in recent years to try to establish se- 
curity of the job. The first effort made was eight or ten years 
ago in the workmen's compensation law — the accident compensa- 
tion law. That was the first comprehensive effort to establish- 
ing security for the job. Unemployment no longer damages the 
man, as it did, who is hurt during employment. The next step 
is probably the similar treatment of sickness— sickness insurance. 

In the case of accident compensation, this curious thing de- 
veloped — employers vigorously fought the legislation at first be- 
cause it was going to increase the cost of production and the 
expenses of business. But after the law was enacted and the 
employers were compelled by law to pay compensation, they in- 
troduced a new element in industry, they introduced a safety 
expert. They developed a new department of industry. I knew 
of an establishment that figured that if the compensation law 
was enacted, their premium on insurance would increase from 
$5,000 to $22,000 a year. That was what they were told by the 
insurance people and by their claim agent, and they were dread- 
fully scared. After the law was enacted, however, they changed 
their claim agent into a safety expert and the very first year, 



PROBLEMS OF LABOR 405 

instead of paying $22,000 for compensation, or even $5,000, it 
only cost them about $2,500. 

The accident compensation law has accomplished the first 
little step towards giving security to the job. It has shown that 
the only way to establish security is by making it financially 
profitable. And so we shall make it financially profitable to 
business to- eliminate unemployment on account of sickness, on 
account of changes in seasons, .on account of fluctuations in 
business. Labor can never accomplish this result. The only 
possible accomplishment of it will come when the employer puts 
in his personnel department, his personnel relations department, 
his safety men, his welfare men, and his men who stabilize em- 
ployment. We know that employers who have done this have 
made their jobs regular — they have regularized their work. 

There are many ingenious methods that can be adopted. Yet 
it appears to me that we cannot get the large capitalistic in- 
terests awake to this subject of stabilizing employment except 
that the Government take hold of it. If we had a tax on un- 
employment of $1.00 a day for every man who is laid off, we 
should find that capitalism would put its personnel experts at 
work to regularize the business, and the)' would have no tax to 
pay because they would have stabilized the work. 

The fundamental lines along which industrial peace is to be 
brought about are those which go to the psychology of the work- 
ing man and substitute in his mind something like that which we 
have in the mind of the investor. The employer who is willing 
to pay compensation for unemployment, who is willing to furnish 
what the working man needs, knows that the working man needs 
to have something to wait for and needs to have confidence in 
the future. 

I visited a number of establishments this summer, making 
a special study of the circumstances under which efficiency had 
been increasing or decreasing, and found, notwithstanding others 
were complaining about labor laying down on the job, yet in 
particular establishments output had increased. What is the 
secret of it? It seems to me that in all of these cases we found 
this — a new principle had come into the business — management, 
had obtained a new view of labor, and I may contrast it by the 
history of scientific management. 

Mr. Taylor, as you know, started out his wonderful develop- 
ment in scientific management by offering to the industrial work- 
ers a chance to better their condition. He appealed to the in- 
dividual worker. But the modern personnel scientific manage- 



406 SELECTED ARTICLES 

ment appeals to the collective interests of all the workers in the 
business. It is beginning to recognize that the working man 
does not want to have high wages for himself if by doing so 
he seems to deprive his fellow workers of high. wages. It is as 
though we are upon a ship on the ocean — there is only a limited 
amount of products to go around; the man who saves his own 
life and let the others go down, cannot live with his fellows after- 
wards. So it is with the modern working man — he is continually 
haunted by this feeling that there is only a limited product to be 
distributed, and consequently even the better ones, when ap- 
pealed to individually to increase their w T ages, cannot stand it 
to go ahead too far amongst their fellow workers. If they get 
out of the class and become foremen and superintendents, that 
is one thing, but to stay in the ranks of labor and to earn much 
more than the others earn seems to be taking bread out of their 
mouths. 

Modern management is learning to deal collectively with the 
workmen in the shop; whatever one worker does to benefit that 
shop will benefit all of us — we are all going to be lifted up to- 
gether. We are not going to set working men competing with 
each other and try to get one ahead of the others, and appeal 
only to his self-interest. That was all right in times past when 
the world seemed to be full of unoccupied resources, when any- 
body could go out and get all he wanted and yet not take it from 
anybody else. Now, as we are getting closer together, as busi- 
ness is getting on a large scale, the man who gets more for 
himself seems to be taking it from the others, and so we have 
that solidarity of labor which is a psjxhology that must be recog- 
nized by all management. 

That psychology should be combined with the idea that the 
business itself is the place where we shall have our living, our 
confidence in the future. I visited Mr. Ford's factory recently. 
Mr. Ford does not have an idea there of cultivating the efficiency 
of his laborers. His great profit-sharing system, as you know, 
is a distribution not to men who are efficient, in order to increase 
the output, but to men who lead a "clean and wholesome'* life — 
they get the profit. The men who do not lead a clean and 
wholesome life do not get profits. John D. Rockefeller says that 
Ford's plant is the industrial miracle of the age. Well, the Ford 
plant is the psychological miracle of the age. It has not gone 
after efficiency first; it has gone after the clean and wholesome 
life. Efficiency is a by-product of the clean and wholesome 
life. 



PROBLEMS OF LABOR 407 

When I visited the White Motor Company, I was impressed 
with the fact that it is not in detailed methods of piece and 
bonus payments that they try to reach the individual and in- 
crease his production, but it is in creating the conviction in every 
man in that industry that that is his industry, that the future 
of that concern is his future. Thinking and planning for the 
future is the White Motor's big efficient machinery of produc- 
tion, just as security for investment is. Get capital to think of 
the security of the job and it begets efficiency of labor. We 
must look upon efficiency as a by-product and not as the main 
thing. 

It seems to me, to transfer this to the national scale, here is 
where capitalists have fallen down. Mr. Gary has fallen down 
representing the capitalistic system; labor organizations have 
fallen down; Mr. Gompers, representing trade unionism, has 
fallen down ; the politicians have fallen down in bringing about 
industrial peace. x Where shall we look for any people in the 
United States who have the preventive idea ; who can look for- 
ward and plan for the future; who will base the bringing about 
of industrial peace on knowledge of labor and on knowledge of 
security? We must look for it in placing the personal relations 
department ahead of the engineering and commercial depart- 
ments and production departments of industry. It is only in the 
personnel department that we find, the beginnings of true scien- 
tific management, the department of scientific human relations, 
which appreciates and knows what are the fundamental things 
for labor's efficiency. If we can have our modern industry con- 
ducted as a personal relations industry, above the commercial 
department, above the engineering department, above the manu- 
facturing department, above the production department, and if 
we could bring together on a national scale, instead, of our 
great financiers, instead of our great labor unions, instead of our 
politicians, if we could bring together those who are developing 
the modern personal relations method, then I think we might 
work out some plan for bringing about industrial peace. 

Yet it is because, and to the extent that, personal relations de- 
partments are coming to recognize some form of collective bar- 
gaining or collective government, that they are fit to come for- 
ward as national leaders at this time. Socialism has no need of 
personal relations in management because, according to Marx's 
theory, "social labor power" moves on to its historic goal regard- 

1 Referring 1 to the recent Industrial Conference called together by 
President Wilson, which split on the question of collective bargaining. 



4 o8 SELECTED ARTICLES 

less of the individual will. Capitalism had no need of personal 
relations because capitalism was but adjustment to the laws of 
demand and supply over which individuals and classes have no 
control. But with our great corporations and associations on 
the one hand, and organized labor on the other, it is only by 
a science of collective management that capital and labor can 
work in harmony and security. It becomes then a science of 
political economy as well as" a science of business. 

The science of political economy began with individual bar- 
gaining. Adam Smith, its founder, in 1776, laid its foundation, 
and in an interesting and important chapter pointed out the great 
evil of collective action. One of the most serious things that 
industry had to contend with, was association of capitalists. 
The great evil of an association of capitalists was that when 
they combine, they deprive the minor it}' of their liberty. The 
majority vote of the association binds the minority. Conse- 
quently, the combination — the association of capital in corpora- 
tions, was condemned by him as intruding upon the liberty of 
the individual. He even went so far as to condemn social 
gatherings of merchants, for he said, "When your merchants 
come together, what does their conversation turn to? It turns 
on hatching up some conspiracy against the public." 

Adam Smith started political economy upon the individualistic 
basis. He spoke at a time when industry was throttled by gov- 
ernments. The French Revolution overthrew that system. The 
French Revolution was an attack by the small manufacturers 
and merchants, the small capitalists and workers, against 
the Government and the governmental regulation? of the 
time. One of the great statutes of the French Revolution 
was that statute which provided that no association, 
either of merchants, manufacturers or laborers, should be per- 
mitted. That statute stood on the statute books of France until 
the year 1884, when it was finally repealed. Meanwhile, there 
had grown up, unknown to Adam Smith, unknown to the French 
Revolution, our modern system of corporations. When it came 
to the middle of the nineteenth century, about the year 1850, for 
the first time, with our general incorporation laws, it was made 
possible for any association of capitalists to come together and 
form a legal association to conduct their business. Prior to that 
time, the only way in which you could form a corporation was 
by going to the Legislature and asking for a special charter. 
With the general incorporation laws, beginning about 1850 in this 
country, it became possible for any group of capitalists to get to- 



PROBLEMS OF LABOR 409 

gether, simply file their articles with the Secretary of State, and 
become as association. That violated all the principles of po- 
litical economy and the French Revolution. 

The modern business world is conducted upon the principle 
of association, of requiring the minority in a group to submit 
to the will of the majority, and if one person happens to be the 
principal stockholder, then all the minority obey the will of that 
one person. We are not living in the time of the French Revo- 
lution — we are living in the time of the Russian Revolution. 

It differs entirely from the French Revolution in that it is 
based upon the principle of government by organized labor— a 
scheme first propounded seventy years ago by Karl Marx, that 
this capitalistic system must be overthrown and that now was 
the time for working men of the world to unite. Russia has 
given us the fruition of that theory, based upon the organization 
of labor. 

Our Western civilization to-day is confronted by an entirely 
different situation. At the time of the French Revolution we 
had a new world opening up, to which the oppressed peoples 
might escape. vThis has been going on, until at the present time 
this new world is pretty well occupied. Great corporations have 
sprung into being. The natural resources are controlled, and if 
the working man is to have any opportunity, he cannot secure 
it by going West, by escaping from Europe and settling on the 
soil of America. When he escapes from Europe, he comes to 
America and works for a corporation. Capital has associated — 
the law has made universal the right of association on the part 
of capital. And with the working man coming into this new 
world, with the resources occupied, without any homestead law 
or opportunities to become independent, he can secure his ad- 
vance only as he works with the thousands, for the corporation. 

Furthermore, the small employers who are not formed in 
corporations, are more and more uniting in associations. We 
have all kinds of associations — associations of farmers ; associa- 
tions of merchants; we have associations of independent manu- 
facturers — they are formed for all classes and purposes, and 
they are recognized in law. They are created into employers' 
associations, operating with a formal policy regarding labor, so 
that the modern working man is confronted with a situation 
where associated effort is the rule of the day; where employers 
have compelled employees to submit their individuality to the 
control of the majority in these associations and corporations. 

The working man of modern life, then, is imbued largely 



4 io SELECTED ARTICLES 

with these ideas which have reached their disastrous victory in 
Russia. He is welcoming the idea, at least to)<ing with the idea, 
that by grouping together in associations he may gain from his 
employers that which he cannot get by escaping to the natural re- 
sources of the country. And whether we will it or not, whether 
we wish for it or not, the working men of modern life, insofar 
as they are capable of organizing, are doing so. 

It is not a theory of collective negotiation of collective gov- 
ernment that we are confronted with, it is conditions and facts. 
They are combining and cooperating more and more, and the 
more that they get intelligence, the more that they get Ameri- 
canized, the more will they combine. In this combination of 
workingmen, they attempt to accomplish through collective 
power what the)' cannot accomplish as individuals. The feeling 
of solidarity is arising amongst them, the feeling that for the 
large majority there is no opportunity for themselves as indi- 
viduals except as they move upward in a mass, that if one indi- 
vidual outdistances the others he is injuring the other, but that 
if he uses his influence in bettering his own condition so that, 
at the same time, it will lift up the others, then that is a desirable 
thing. This feeling of solidarity, this feeling of unit)', is forcing 
him, as it were, throughout the Western world to assert what 
collective power he can. The employer who starts out with an 
idea of individual bargaining is confronted by the fact that he 
perhaps will not have a chance to enforce his ideas. 

There are two classes of employers, you might say. There is 
that class of employers, corporations or individuals, who conduct 
their business in such a superior fashion, who have such per- 
sonal relations developed with their employees, that labor has 
no desire to force a collective arrangement upon them. There is 
another class of employers, either through their own attitude or 
through the stress of competition, who are not free to deal with 
labor on these higher personal relations. Labor organization 
has not come into existence at all to deal with that first class 
of employers. It has not been provoked in order to overcome 
any resistance on their part. It has come in solely in order to 
use coercion with reference to the other class of employers. The 
collective dealing which we are considering is not to be con- 
sidered universal — it is not to be considered as applying to all 
employers or all capitalists. It applies only to those who need it ! 

Labor organization, however, has this defect, that when once 
it has started, when once it has begun to apply, it stretches out 



PROBLEMS OF LABOR 4" 

to reach all employers in a competitive area. By force of cir- 
cumstances it brings the others into the fold. A small number 
of employers or corporations may be above the level, but a large 
proportion are in that field where there is a contest and a conflict 
going on. 

If we let our vision pass from the time of Adam Smith and 
the French Revolution, when individual bargaining was the ideal 
of political economy, down to the time of the Russian Revolu- 
tion, when these very corporations themselves, although they 
have become enormous, are treated as though the}' were indi- 
viduals, if we allow our view to pass over this country, we shall 
widen our comprehension and not only have a place for the in- 
dividualism which produced the French Revolution, but will 
have a place for that collective idea which has shown itself in 
the Russian Revolution. 



OCCUPATIONAL HYGIENE 

INDUSTRIAL LOSSES ' 

Industrial work as directed in this country today is wasteful. 
With all the inventive genius of the American — for the records 
of the Patent Office show twice the output in inventions of any 
other nation — the fact remains that production is unnecessarily 
costly. There are reasons for this inherent in the factory sys- 
tem as now managed. But there are other reasons which arise 
out of a false economic hypothesis as to the essential require- 
ments of cheap production. The two main items upon which 
plant managements, seeking to reduce costs, have concentrated 
their attention have been raw materials and wage rates, with 
the major attention given to the later. Most industrial contro- 
versies arise out \ of wage questions. And yet there is enough 
waste in plant management today to permit the payment of a liv- 
ing wage to all workers and to grant to capital a fair return on 
its investment. It is to the interest of labor to urge a stoppage 
in this leakage with the consequent salvage of wasteful expendi- 
tures, as a prerequisite to any proposed adjustment of wages if 
such adjustment will deny to the workers a living wage. To 
anyone interested in the problem of industrial hygiene, certain 
items of this loss stand out conspicuously. It is estimated, on 
the basis of numerous surveys into sickness among workers, that 
every year industry in the United States loses through illness 
about 280,000,000 working days. This represents the productive 
capacity of one million workers working an entire year each. 
More than half this loss is unnecessary and is due to prevent- 
able causes, some of which are traceable to inefficient health 
work in industrial communities, and more of which are due to 
working conditions which injure health. 

This absentee rate due to sickness does not represent the full 
loss to industry resulting from absenteeism. Independent of the 
legal holidays and without considering the seasonable trades 
which would raise the rate much higher, absenteeism for all 

1 By Bernard J Newman, Consulting Hygienist. U. S. Public Health 
Service. American Federationist. 26:1032-4. November, 19 10. 



4 i4 SELECTED ARTICLES 

causes runs from 60 per cent to 300 per cent more in different 
plants. Thus one establishment from which accurate records 
have been obtained from the time sheets shows an absentee rate 
of 10,450 days lost per year per 1,000 workers; another shows 
a rate of 31,860 days per i 5 ooo workers; a third shows a rate of 
19,310 days lost per 1,000 employees, while a fourth records 
21,410 days lost per 1,000 employes. Although the daily time 
sheet contained the records here noted, yet the management in 
no case had taken the record off and did not know the drain 
of such absenteeism. Few industrial plants tabulate their rec- 
ords and fewer still interpret them when they have been col- 
lected. Directing a large force of engineers and medical men in 
plant surveys for the past } r ear I have been impressed with the 
lack of familiarity shown by plant managers with the losses 
resulting from a lack of continuity of employment. Cost engi- 
neering has apparently disregarded the big human factor intro- 
duced by hazardous and obnoxious trades and processes which 
cause accidents and sickness and has neglected as well those 
personnel problems which, lacking attention, increase absent- 
eeism and contribute prominently to labor turnover — a costly 
inattention in that the production capacity of the plant during 
operation is not utilized, production processes being slowed up 
when the progress of materials is interfered with, because green 
hands are on the job or because production in a particular line 
is stopped pending the return of the worker. In the relatively 
few instances where these factors have been taken cognizance of 
and provisions made to reduce turnover, sickness and absent- 
eeism, the determination of the saving resulting thereby could 
not be estimated because such a program was a part of a larger 
program involving the introduction of a more democratic prin- 
ciple in shop policies and management. 

It is to the interest of both the employer and the employee to 
eliminate the causes which produce sickness and absenteeism ; to 
the employer because he can ill afford to have the cost of pro- 
duction increased ; to the employee because he can not afford the 
wages lost nor the medicine and doctor's bills incurred, let alone 
the more remote but certain effect of an increase in the cost of 
living. No item of cost in production is borne alone by the 
manufacturer; he passes it, or as much of it as the market will 
stand, on to the consumer. The workers form a large percent- 
age of the consumers. Both are injured when the supply equals 
or runs short of the demand, thereby permitting the profiteer 
to corner the market and to force prices still farther up. 

It is to the best interest of labor to see that a provision is 



PROBLEMS OF LABOR 415 

incorporated in all agreements made with plants calling for the 
installation of the latest improvements which will reduce the 
number and severity of occupational health hazards. Just as it 
is to labor's interest to insist upon a reduction of the mechanical 
hazards. The toll in suffering and financial loss from mechan- 
ical hazards and carelessness alone, approximating in deaths 
annually about an eighth of a million persons and in serious in- 
juries about 2,000,000 more, is too great to be accepted with com- 
placency or indifference. 

The effect of all processes in industry upon the health of the 
workers has not been determined. In approximately 126 proc- 
esses dust is alleged to be a health hazard, while in 650 processes, 
poisons are to be guarded against. For most of these definite 
engineering and other preventive measures are determinable. 
Where such installations have not been made the plant is alone 
to blame for every injury and every case of poisoning occurring 
therein not resulting from carelessness on the part of the em- 
ploye. Moreover personal service facilities of a sanitary char- 
acter in adequate ratio to the number of employes are not fads 
but definite aids to the maintenance of health. Insignificant as 
it may seem to those not working on health problems, the place- 
ment and upkeep of such facilities are also closely related to 
the maintenance of health. 

However, it avails little if the employer installs safety de- 
vices or provides personal service equipment to reduce hazards, 
if the worker fails to make use of such. The most difficult prob- 
lem in the promotion of industrial hygiene is how to overcome 
the recklessness of workers who through long exposure to occu- 
pational hazards have become blunted to their danger and object 
to the use of safeguards because they may in some instances 
cause inconvenience. Experience is a valuable teacher, but 
where the effect of such experience is upon the delicate mechan- 
ism of the human body or brain the correct interpretation of it 
can not be made by one untrained in physiology, medicine and 
kindred sciences. Hence the unreliability of the witness who so 
glibly states that "I have worked here for 20 years and have not 
been made sick; there is no harm in this job." Industry today, 
with the increased responsibility forced upon it by changed 
world trade conditions, can ill afford to ignore industrial sani- 
tation and its indices, sickness, absenteeism, and labor turnover; 
and the industrial worker can still less afford to be indifferent 
toward or superior to the use of safeguards provided or which 
should be provided for his protection and for the increase of 
his efficiency. 



416 SELECTED ARTICLES 

INDUSTRIAL PHYSIOLOGY, A NEW 
SCIENCE 1 

Industrial physiology has two objects: First, the more purely 
scientific one of learning how the industrial worker actually per- 
forms his work and what the conditions are under which he can 
work most efficiently and can produce the largest output while 
at the same time maintaining his body in health and in the best 
working condition; and, second^, the more practical object of 
establishing in the factories the conditions which conduce at the 
same time to the maximum output and the maintenance of the 
maximum power of the worker. The former of these two ob- 
jects is now being achieved; the latter will be achieved when it 
becomes clear to both employers and workers that it is to the 
advantage of both that industrial work be organized on a really 
intelligent basis and not, as heretofore, on a basis of ignorance 
of how the worker can do his best. 

The methods by which industrial physiology is being de- 
veloped are the recognized methods of all scientific investigation, 
namely, observation and experiment. The investigations are 
carried on chiefly in the factories, the workers being used as 
the subjects and under their actual working conditions, these 
conditions being changed when it is desired to compare the effi- 
ciency of one set of conditions with that of another. Exact mea- 
surements of output are made, and, where it is possible, exact 
tests of the physiological effects of the work are employed. 

Some of the topics that have been or are being investigated 
and some of the results are the following: 

Certain physiological and psychological tests have been em- 
ployed with workers, and it appears practicable to employ some 
of these tests in selecting workers and assigning them to their 
jobs. 

The output of the successive hours of the working day in 
different types of operations has been measured, and the daily 
curves of the output have been plotted. These vary with the 
kind of operation, but are alike in showing a reduced efficiency, 
indicating a growing fatigue as the day proceeds. 

Reduction in the length of the working day is characterized 

1 From the new science of industrial physiology, by Frederic S. Lee, 
Ph. D., LL. D., professor of physiology in Columbia University. Public 
Health Reports for April n, 19 19, pp. 723-728, United States Public 
Health Service Washington. Reprinted in the Monthly Labor Review. 
9:902-4. September, 1919. 



PROBLEMS OF LABOR 417 

by an increase in the output of the successive hours and usually 
by a total increase in that of the day. The optimum duration of 
work probably varies with the character of the work itself. 

The introduction of resting periods in the working spell is 
accompanied, especially where the working day is long, by a 
total increase in the days production. A five-hour working 
spell, unbroken by resting periods, is probably always too long. 

Overtime following a day of labor is inadvisable, as is also 
Sunday work following a week's labor. These tend to impair 
the worker. 

A hot day tends to impair strength and reduce output. Every 
effort should be made to keep the body of the worker cool. 

Night work is, in general, less efficient than daywork. Its 
total output is less, and this, with a long working night, falls off 
enormously in the early morning hours. Alternation of periods 
of night work with periods of daywork is more profitable than 
continuous night work. 

Women are capable of performing a much greater variety 
of industrial operations than has heretofore been recognized 
They should not be employed for night work. Statistics show 
that they are absent from their work more frequently than men. 
The problem of women as compared with men in industry is not 
that of their greater or less efficiency, but rather a problem of 
what t} r pes of work each sex is best fitted for. 

Accidents to workers are a grave source of inefficiency. 
They are caused by fatigue, inexperience, speed of working, in- 
sufficient lighting, high temperature, and other factors. Many 
industrial accidents are preventable, and adequate provisions for 
first-aid measures tend to diminish the seriousness of accidents. 

Food and efficiency are directly connected with one another, 
and suitable and adequate food can probably be best provided 
through the establishment of industrial canteens. 

A high labor turnover is incompatible with the highest degree 
of efficiency. It is expensive, in that it imposes upon the em- 
ployer the necessity of training new workers, and it is a serious 
factor in causation of accidents. 

Physiological analyses of certain operations have been made 
by means of the cinematograph and other methods, and it has 
been found possible to eliminate unnecessary motions and to 
train workers so as to secure a more regular rhythm, such mea- 
sures increasing efficiency. 



4 i8 SELECTED ARTICLES 

The self-limitation of work on the part of workers has been 
studied and found to be very common. Every legitimate effort 
should be employed by foremen and managers to eliminate this 
and to induce workers to work up to their physiological capacity. 
Driving workers beyond their physiological capacity defeats its 
own ends. 

Note : The results of the study of industrial physiology so far 
have been sufficiently encouraging to lead to the provision of 
support for their continuance in several countries both by Gov- 
ernment and by private endowment. In Great Britain investi- 
gations begun by the Health of Munition Workers Committee 
are being carried on under the new Industrial Fatigue Research 
Board which was appointed jointly by the Departments of 
Scientific and Industrial Research and the Medical Research 
Committee and which has formulated an ambitious and far- 
reaching plan for future investigations. The Municipal Tech- 
nical College of Victoria University, Manchester, has established 
a department of industrial administration, of which Prof. Stanley 
Kent, who has been carrying on an independent investigation of 
some phases of industrial fatigue during the past three years, 
is director. 

While France has not yet taken definite steps toward the 
establishments of such a center, the work will probably not be 
long delayed, as such a plan of research had been outlined by 
the Marey Institute of Paris, under the directorship of Prof. 
Richet and the subdirectorship of Dr. Bull, just before the war 
made its immediate realization impossible. 

In the United States the Public Health Service, with the co- 
operation of the committee on fatigue in industrial pursuits of 
the National Research Council and the committee on industrial 
fatigue of the Council of National Defense, has been conduct- 
ing investigations within the scope of industrial physiology dur- 
ing the past 18 months and a report on them is promised in the 
near future. Harvard University has recently established 
courses in industrial health, through the financial support of a 
group of manufacturers. These are under the direction of a 
committee on industrial hygiene and are affiliated with the pub- 
Uc-health work of Harvard University and the Massachusetts 
Institute of Technology. Johns Hopkins University, through its 
recently founded School of Hygiene and Public Health, also is 
expected to initiate work along similar lines. 



WOMEN IN INDUSTRY 

THE NEW SPIRIT IN INDUSTRY 1 

Helen Frazer, writing of Women and War Work, especially 
in Great Britain in the midst of the war, said, "We know, 
though we do not often define it, that the forces we women 
fight in the enemy are the forces that have left women out in 
world affairs." 

If this be true, as a description of the forces which the 
allied nations were opposing during the war, it is true now that 
the war is over, that one of the most important tests of the 
philosophy and the understanding of the nations that have taken 
part in that conflict will be their attitude toward women in in- 
dustry, and more broadly their attitude toward the economic 
position of women. 

The position of women in society in an industrial age can- 
not be determined apart from their economic position. It is 
based upon a recognition of their normal relation to economic 
life. But on that subject there is no agreement; there is a con- 
flict of opinion, a conflict of forces, even in those nations which 
have been on the liberal side in this world's war. 

Moreover, the questions concerning women in industry are 
part of that big question which we call the "labor problem ,, and 
constitute, therefore, not merely the center of conflicting views 
regarding the economic position of women, but also a vital part 
of that other conflict which gives rise to a different alignment 
of groups in accordance with their own philosophy, and their 
special interests. 

Under the circumstances, it is difficult to find a common 
basis for action if we are really dealing with the fundamental 
aspects of this question. It is well to remember that common 
interests always lie deep, and that conflicts and diverging in- 
terests are in plain view on the surface. The common interests 
in any problem in which there is such a conflict can be pene- 

1 By Mary A. Van Kleeck, Former Director, Women in Industry Ser- 
vice, U. S. Department of Labor. Address delivered before the Toledo 
Consumers League. May 3, 1919. 



420 SELECTED ARTICLES 

trated only by the illumination of genuine faith in the over- 
whelming importance of the common welfare. In no other way 
can a true solution be found in labor disputes. We are chal- 
lenged by the labor problem to a concrete expression of faith in 
the common welfare as our unwavering aim and allegiance. 
Such a point of view commits us to no easy solution and no 
glib and well-rounded conclusions. 

It is the hope of America that our democracy is founded 
upon equality of opportunity for all citizens to share in the com- 
mon life. The challenge today to America is to demonstrate 
that common action for the common good is possible in industry. 
Only by penetrating below the surface of the preoccupations and 
the prejudices of special interests, can an alliance be formed of 
all those who believe that the most important aim in our democ- 
racy is the common welfare. Good faith in allegiance to the 
true spirit of democracy is the common basis of action for all 
groups, — employers, workers and all other citizens. 

But good faith is not to be realized in a spirit of easy 
acquiescence. When we talk about good will and good faith 
in the labor problem today, we are not summoning men to a love 
feast of harmony, assuming an identity of all their interests. 
Both groups are challenged rather to a firm insistence upon the 
social interests of the whole community, and it is a challenge, 
moreover, that may involve conflict, just to the extent that an 
insistence upon the common welfare, as opposed to the interests 
of any one group, may demand conflict. At times, the common 
interests will be more closely allied to the interest of one group 
than to that of the other, but the touchstone of any policy will 
be its identity with the common good, and in achieving it, the 
sacrifice of special interests may often be inevitable. 

Now women in industry illustrate all of the difficulties of 
these disputed questions. A word about the facts, as they have 
been shown in the experience of the war, may afford a basis for 
clearer understanding. For the first time, during the war, ex- 
plicit recognition has been given by all civilized nations to the 
essential national importance of women's work, especially wo- 
men's work in industrial production. In a crucial period of the 
war, it was the War Department in Great Britain which de- 
clared that without the extension of the employment of women, 
England could not hope to win the war. In our own country for 
the first time the national government recognized the prime im- 
portance of women's work by creating federal agencies to deal 



PROBLEMS OF LABOR 421 

with the problems of women's work, and the very first depart- 
ment in which such an agency was created was, significantly 
enough, the Ordnance Department, which had the biggest pro- 
duction program of any single division of the War Department. 
Faced with a production program of outstanding importance, 
the Ordnance Department was obliged to take cognizance of 
labor conditions as a phase of production, and, moreover, to 
recognize the importance of women's work as necessary in pro- 
duction. That is to say, the first recognition- of women's work 
through the establishment of a definite agency in the federal 
government came not primarily in order to protect women work- 
ers, but it came in order to insure the most effective use of their 
energies as a normal and necessary part of the productive forces 
of the nation. 

In the experience gained through thus recognizing their im- 
portance, a new support was given to many of the claims which 
had been pressed before the war, for shorter hours and for a 
fairer basis of determination of wages. The question of hours 
of work was necessarily viewed during the war as a problem of 
production, because production was most vital to the life of 
the nation. From production was derived the power of the na- 
tion to do its part in the battle for civilization. In the course 
of finding out what conditions made for maximum production, 
it became clearer and clearer both abroad and in this country 
that there were many things we did not know and had not 
known before the war about the meaning of hours of work. 
Before the war many conflicts in industry and much loss of 
valuable time and energy and working days had resulted from 
disputes as to whether ten hours should prevail, because a day 
of ten hours was the practice in industry, or whether a day of 
nine or eight hours, which was being demanded by the workers, 
should be inaugurated. The usual method of settlement was 
the cessation of work, — the contest of power between the two 
eroups who believed their interests on this point to be opposed. 

During the war we could not decide so important a question 
merely on the basis of the relative strength of conflicting in- 
terests, because the essential interest of the nation was in maxi- 
mum production and its was recognized as entirely possible to 
say "We will use science in this conflict and we will determine 
facts." When Great Britain was faced with a shortage of shells. 
the Ministry of Munitions appointed a Committee on the Health 
of Munition Workers, and that committee by studies of actual 



422 SELECTED ARTICLES 

output hour by hour brought in reports in which they said, first 
of all, that a weekly day of rest must be allowed if maximum 
output was to be maintained for any length of time. They then 
went on to show in later reports that working twelve hours a 
day meant less production than working ten hours a day. They 
discovered evidence of the necessity for the "physiological bal- 
ance," which meant that the workers who went to work in the 
morning facing a twelve-hour day, produced less in the first ten 
hours of that twelve hour day than if their day were determined 
from the beginning as ten hours. 

Moreover, as the w 7 ar went on, it was shown that the first 
reports were very conservative. The Committee did not even 
declare that there should never be any longer working period 
than eleven or twelve hours. But each subsequent study made 
by that committee, appointed as it was by the Ministry responsi- 
ble for producing munitions, indicated the need of a still further 
shortening of hours. The reports showed very clearly that by 
experiment unexpected things were discovered. It had beep- 
commonly accepted as true that if the individual effort were 
the prime consideration in a particular job, fatigue would mean, 
of course, that the output of that job would be decreased, but it 
was discovered in Great Britain that even in an automatic 
process where it is merely a question of tending a machine, out- 
put was more satisfactory under a shorter hour arrangement. 
In automatic operations, irregularity of attendance came into 
play and the necessity for keeping machines in motion, satis- 
factorily attended during the full working period, brought us 
back again to the fact that upon human conditions, — the physical 
condition of the workers, — depended the output of shells for the 
army in France. 

Moreover, such circumstances as crowded or irregular street 
car service, or the lack of hot food at lunch, or crowded living 
conditions, or inadequate housing, were all reflected in the actual 
quality and quantity of cartridges and big guns that could be 
sent from British factories across the channel to France. In 
the same way in our own country some important plants were 
not securing the expected production, and it was reasonable to 
trace a connection between the effort to keep the force working 
ten hours a day and sixty hours a week, and the downward 
trend of the curve of production as it was measured by the stat- 
isticians in the Ordnance Department, who were watching that 
curve as the very Hfeblood of the nation. They could not keep 



PROBLEMS OF LABOR 423 

one hundred per cent of their machines going one hundred per 
cent ol the time, when the hours of work were too long to avoid 
fatigue and to insure regular attendance. 

And so I think we have learned during the war two things, 
at least. We have learned first of all that support is given to 
human demands in industry, through convincing demonstration 
of their effects upon production; and secondly, we have learned 
that a whole field of knowledge remains to be discovered on the 
subject of working conditions and industrial relations, and that 
discoveries are to be made through a scientific attitude and a 
desire to find out the facts. In a few instances this attitude has 
been due very largely to the introduction of women, because 
with the new personnel which women represented, there was a 
reason for making a study of working conditions which was 
lacking when the plants were continuing to employ men just as 
they had always employed them. 

During the war another change took place which affects wo- 
men. Women's opportunities to work were enlarged. But, more 
important than this enlargement, — because it is true that wo- 
men were in a variety of occupations before the war, — more 
significant even than a new opportunity was the new attitude of 
the public towards it, — the public's interest in seeing women 
enter new fields of work. 

If we have in industry a group which is limited in its choice 
of occupation, a group which is expected by custom or prejudice 
to confine itself to certain occupational fields and not go beyond 
them, this group will of necessity exert a down-drag on stand- 
ards. It is not only a question of giving enlarged opportunities 
to women, but it is a question of developing throughout indus- 
try a recognition of the right of the individual to choose the job 
for which that individual is best equipped, and in which he or 
she will, therefore, most effectively contribute to the life and 
the wealth of the nation. If we carry out that principle fully 
and logically, we shall not have barriers of custom or prejudice 
against the employment of women. 

This freedom of choice is vital not only to standards in in- 
dustry but, also, to standards of living in the home. Strange as 
it may seem we always have to go over the ground and prove 
that women are working for the same reason that people have 
worked for many, many centuries on this globe, that is, to earn 
a living. Women have worked in the past, as men also worked, 
under a different order and a different organization of industry. 



4 2 4 SELECTED ARTICLES 

and perhaps the new organization of industry under the factory 
system affected more broadly and immediately the status of 
men in the industrial world, whereas for women some tasks re- 
mained in the home and were performed by women without 
wages. The number of these tasks at home has gradually de- 
creased. 

Perhaps because of the slowness of that process, we do not 
realize that the process is essentially the same for women as for 
men. There was a time when men went into modern industry. 
They went in at the beginning and women have been going in 
more gradually. So we miss the real truth of the matter by 
failure to view the fundamental causes of this so-called intro- 
duction of women into industry. The important fact is simply, 
as has been said many times, that the conditions under which 
women work have changed, and much of their work is no longer 
done at home. Many of the tasks of women are now done under 
a more highly organized system. The differences in indus- 
trial development are great, however, in different parts of the 
country, and these differences are reflected in public sentiment 
about women's work. Those who live in a community where 
the employment of women for wages has not yet become ex- 
tensive are likely to judge the whole question as it affects the 
nation from the standpoint of conditions in their own locality. 
It is in a highly developed industrial community, however, that 
we can best study the problem. 

Women are working for the very same reason that they 
have worked for many centuries, and that is to contribute, first, 
to their own support, and, second, to the support of the family 
group of which they are a part. We have a certain typical fam- 
ily in mind which we consider the typical family in American 
life. It is composed of the father, the mother and the children^ 
who are in school, and we are very likely to interpret questions 
of women's work in the light of that family and its needs. 
There are however, mam' families of a different composition, 
which are also typical in American life, and in the national 
standard of living all the different types have their influence. 

One of these other types is the family in which the history 
is farther advanced than in the typical family usually chosen 
as the "norm." In this older family the children are grown, 
and the father or mother may be dead or unable to work or to 
contribute to the family support. In these families it is very 
likely to be the daughters who are the mainstay. It is upon the 



PROBLEMS OF LABOR 4^5 

work of women in industry that they depend very largely for 
their support. And the welfare of the younger children in these 
families depends very largely upon the standard of wages earned 
by their older sisters. Facts like these have been brought out 
in many official investigations. 

The large investigations made by Act of Congress in 1907-08 
revealed the fact that such was the typical family of women in 
industry. Whether it be in the mills of the north, or the mills 
of the south, or in an urban industry like clothing, or an indus- 
try which, like the making of glass, is more largely carried on 
in country districts, in ail these varied communities when the 
families of the girls employed in these important and character- 
istic trades were visited, it was found that the proportion of the 
family income contributed by the daughters was larger in the 
majority of cases than the proportion contributed by the sons, 
while in no group did the proportion contributed by the father 
average higher than fifty-six per cent of the total family budget. 

Now those are the facts. Whatever we may believe to be 
our ideal of American life, however convincingly we may be 
told that if the home is to be preserved, women must not go into 
industry, the facts are that thousands of homes are dependent 
very largely upon the earnings of women and that our decision 
as to the wages which are to be paid to women will determine 
in very large measure the standard of living for those thou- 
sands of families throughout the country. 

That being the case, it seems to be clear in the experience 
of the war that the statement made officially for the first time 
by the federal government that there should be equal pay for 
equal work is a long step forward, but it does not go the whole 
way because it is commonly held to apply only to those occupa- 
tions in which women take the place of men, and then to those 
occupations only if they are performed in identically the same 
way when women are engaged in them as they are performed 
when men are engaged in them. The statement of the principle 
of equal pay for equal work brings up the whole question of 
the basis of determination of women's wages. The more fun- 
damental principle that has been enunciated again and again dur- 
ing the war and before the war, is that the minimum basis of 
wages should be the standard of subsistence for the typical 
American family. If we accept this principle and if we recog- 
nize the fact that the families of women wage-earners are de- 
pendent in large measure upon the earnings of women, then 



426 SELECTED ARTICLES 

there seems to be no logical reason for saying that the earnings 
of women should be on any other basis than the earnings of 
men. That is to say, that the minimum wage should cover the 
cost of living, not merely for the individual but for possible 
dependents of the individual. Over and above that, we neces- 
sarily develop differentials in wage rates corresponding to dif- 
ferences in skill, differences in length of service and all the 
other factors that normally make for difference in wages. 

But whatever the accepted basis may be, it is impossible in 
the light of the experience during the war to defend, as socially 
desirable, a difference in the method of determination of the 
wages of women and the wages of men, based on the assumption 
that some occupations are men's work, rated according to men's 
wages, and other occupations are women's work with women's 
earnings as their reward. Our new conception should be that it 
is the individual and not the sex, that determines both the oc- 
cupation and the wage. 

Now in all these problems, in the question of wage rates, 
the question of hours of work, and especially in such a problem 
as that of unemployment, men and women workers have a com- 
mon interest. Indeed, all of the fundamental labor problems 
effect both men and women. But there are also special prob- 
lems in the present status of women workers. 

A very serious question which came up during the war is 
still with us. It was the problem of a plant or a company in 
which there had been a long history of bitter relations between 
employers and workers. The moment a company of that kind 
which had not secured the asset of good will in human relations, 
whatever else it may have had to its credit, announced its plans 
to introduce women, no matter how necessary it might seem to 
be from the point of view of labor conditions in the community, 
or the need of the country for the particular product, at once, 
that company was open to the suspicion of using the war as a 
pretext for introducing women and hence lowering standards. 
This is a suspicion which we may still have ahead of us, though 
the war is over. Emplo}^ers may in the future be under the 
suspicion of using women as a means of changing the balance 
of power between themselves and their workers, or of employ- 
ing women as a means of settling industrial disputes to the ad- 
vantage of the company. On the other hand, obstacles may be 
put into the way of the attainment of standards for women in 
industry, if their fellow-workers, the men, fearing a lowered 



PROBLEMS OF LABOR 4^7 

standard or unemployment, oppose blindly the employment of 
women. 

It seems clear that both of these dangers, — exploitation by 
employers and the opposition of working men to wider oppor- 
tunities for women, — must be met by such good will and good 
faith in industry as shall establish clearly for women the stand- 
ard which should be established for all workers. No other way 
out can be found except recognition by industry itself of the 
need for dealing with this question as vital alike to the standards 
of industry and the standards of the home. 

We would all agree that the employment of women in in- 
dustry has a vital effect upon the home, upon children, and upon 
family life, and many view with misgivings the tendency to 
enlarge the boundaries of women's work for wages. But an- 
other point of view is reasonable. If we are entrusting to the 
women of the country such vital things as the care of the home 
and the care of the children and a very large share of responsi- 
bility for the development of family life, we cannot expect them 
to achieve success in these tasks if we continue to deny to wo- 
men the development of their best capacity and of their best 
power. Far from being a movement antagonistic to the best 
interests of the home, the best interests of the family and the 
best interests of children, it is precisely on the ground of these 
best interests that we may view with satisfaction the enlarging 
area of occupations for women and the new tendency to value 
their work on a different basis, whether it be work for wages 
or whether it be unpaid work in the home. 

It is the woman who is actually paid a just wage for her job 
who can give a demonstration of effectiveness and capacity and 
power, and her experience will lead us to a clearer realization 
of the economic contribution which women are making in the 
home without wages. And the job itself, appraised at its true 
value, releases new power in the individual who achieves it. On 
these grounds, it is by no means a small argument that we have 
for the development not merely of a protective attitude toward 
women in industry, but of a real recognition of women as an 
essential part of our whole industrial organization, and as in- 
volved everywhere in precisely the same fundamental problems 
as confront men of industry. 

Although these problems seem to be overwhelming in their 
complexity, there are certain signs of a new spirit in industry 
which are very encouraging at this moment. If industry should 



428 SELECTED ARTICLES 

be in danger of not measuring up to the new challenge, — the 
challenge to prove that the ideal we have had in political life 
can be expressed in industry, — then the problems ahead will be 
serious, but there are signs of realization on the part of man- 
agement in industry of the importance of devising new methods 
of expressing human relations. For example, the establishment 
of the personnel department on a more dignified basis is a recog- 
nition that the working force is at least equal in importance with 
the whole organization of production or finance. That recog- 
nition should go far deeper. It is sometimes a mere groping 
desire on the part of management to adjust methods to new 
conditions. 

The newest and most significant of these developments are 
the experiments in new plans of cooperative relations with em- 
ployees. These are taking the form of shop committees, which 
aim to represent the collective action of workers and employers. 
In some instances, those very experiments will give rise to the 
new industrial disputes, and new difficulties, especially if they be 
developed in plants, which as in the case of the introduction of 
women already cited, have had a long history of bitter relations 
between employers and workers. Moreover, the important ques- 
tion is, whether these organizations of vv-orkers which are limited 
to one establishment, with the workers dealing with the em- 
ployer concerning working conditions in that one establishment, 
can be the real answer to the demand for industrial democracy, 
or whether the plan for collective bargaining advocated for 
many years by the workers themselves, — whereby the workers in 
all shops within a trade are joined together in an organization 
which in turn bargains with the employers in that trade,— has 
in it the elements of growth. 

That is a question which we are going to be able to answer 
through these various experiments and that is the real value of 
these experiments. Their success will depend on good faith and 
good will. The ultimate test of their enduring value will be 
whether or not they will cut below special interests and empha- 
size the common interests and the common good. Just to the 
extent that they do not serve the common good and make the 
industry a common possession, they will necessarily fail. 

Their purpose is to express the new spirit which has been 
released in all nations by the worM conflict. This spirit may be 
described as a new appreciation of the position of the individual 
in society, and a protest against those practices in democracies. 



PROBLEMS OF LABOR 4^9 

as well as in autocracies, which gave a wholly selfish political 
influence to an economic power gained through failure to recog- 
nize the interests of the workers or of the community in the con- 
duct of industry. 

Another highly important sign of the times is the inclusion 
of labor standards in the Treaty of Peace, which signifies ac- 
ceptance of the principle that the new peace must be shaped on 
the fundamental basis of international labor standards. The 
genuine application of this principle would rebuild the world on 
a new foundation. 

The demand on industry today is that it should be able to 
meet these newly expressed social needs. It is true that we can 
decrease hours to an extent probably that we have dreamed of 
in the past while at the same time increasing production. But 
increased production under existing conditions is not the only 
test of practicability to be considered. The demand to be made 
upon industry is that it will so change its methods, and so de- 
velop efficiency, as to be able to meet these new demands, which 
are based primarily upon social needs. For example, consider 
two plants. One of them discovers that the eight hour day can 
be granted and production increased, while the other one dis- 
covers that to shorten hours on the basis of its present methods 
will decrease production. We ask of industry that the plants 
which the second in the illustration represents, — those w T hich 
have not developed efficiency in management to enable them to 
insure the minimum conditions deemed necessary for the work- 
ers and citizens in a democracy,- — shall measure up to a changed 
method of management which shall enable business to insure 
the standard of life set up as our goal. 

Increased production and increased efficiency are obviously 
essential if the standard of living is to be raised. This is not 
only a question of fairer distribution. It is a question of en- 
larged production through greater efficiency all over the world, 
including this country of ours. But the point is that efficiency 
and enlarged production cannot be achieved except under guar- 
antees that the results of increased efficiency and the results of 
increased production shall be a common possession. So long 
as we have in industry the conditions which give ground for 
belief that these guarantees do not exist, the co-operation of 
the workers in increasing production will be withheld, because 
their experience has shown in too many instances that increased 
production resulted in cuts in wage rates and that for some 



430 SELECTED ARTICLES 

reason the beneficial results did not come either to them or to 
the community. Industry must do away with the causes of this 
distrust if the vital national need of increased production is to 
be met, and the wealth produced which alone will make possible 
an adequate standard of living. 

We cannot attain increased efficiency and increased produc- 
tion if we leave women workers out of the question. They rep- 
resent at least twenty per cent of the gainfully employed popu- 
lation of the country. In some industries and communities the 
proportion is much higher. For them, as for all workers, there 
must be assured a share in the directing power of industry 
through industry itself and through the state, to the end that 
their special needs will not be neglected but will be merged into 
the whole common interest for which men and women must be 
held jointly responsible. 



STANDARDS GOVERNING THE 

EMPLOYMENT OF WOMEN 

IN INDUSTRY 1 

In peace or in war, women's work is essential to the nation. 
During the war the experience of all countries has shown that 
women were ready and able to take the places of men with- 
drawn for military service. So important did their work become 
that in Great Britain it was actually the War Department which 
declared that "efforts must be devoted to amplify and extend the 
scope of usefulness by which alone our county can hope to 
emerge victorious from a struggle without parallel in her long 
and glorious history." 

The experience to which the war has drawn public attention 
was true before the war and will be equally true when peace is 
restored. Before the war the number of women gainfully em- 
ployed increased in the decade before ioio from five to eight 
million, of whom two million, five hundred thousand, were in 
manufacturing, trade, transportation or public service. Since 
then the indications are that in numbers and proportions, women 
have become increasingly important in industry. 

The greater necessity for control of the standards of wo- 
men's emplo3 r ment is due to the fact that women have been in 
a weaker position economically than men. Reconstruction will 

1 Set by the U. S. Department of Labor in 1918. 



PROBLEMS OF LABOR 431 

give an opportunity for a new up-building of safeguards to 
conserve alike the industrial efficiency and the health of wo- 
men, and to make it impossible for selfish interests to exploit 
them as unwilling competitors in lowering standards of wages, 
hours, working conditions and industrial relations which are for 
the best interests of the workers, the industries and the citizen- 
ship of the country. 

During the war, by vote of the War Labor Policies Board 
all contracts of the federal departments have contained a clause 
requiring full compliance with state labor laws, and in each 
state an official of the state labor department has been deputized 
by the head of the contracting departments of the federal gov- 
ernment to co-operate with federal agencies in enforcing these 
provisions of the contract. This affords a basis and a precedent 
for continued relations between state and federal agencies in 
the up-building of standards for women's labor. As the num- 
ber of contracts grows fewer with the coming of peace, the re- 
sponsibility of the states increases. But the recognition of the 
national and international importance of standards of labor 
conditions wHl still be paramount since in peace, no less than 
in war, the nation will depend for its prosperity upon the pro- 
ductive efficiency of its workers. No other foundation for com- 
mercial success will be so sure as the conservation of those 
practices in industry which make for the free and effective co- 
operation of the workers. Protection of the health of women 
workers is vital as an economic as well as a social measure of 
reconstruction. 

Therefore at this time in recognition of the national im- 
portance of women's work and its conditions, the federal gov- 
ernment calls upon the industries of the country to co-operate 
with state and federal agencies in maintaining the standards 
herein set forth as a vital part of the reconstruction program 
of the nation. These standards have been adopted by the War 
Labor Policies Board. 

Standards Recommended for the Employment of Women J 

I. Hours of Labor 

1. Daily Hours. No Woman Shall Be Employed Or Permitted 
To Work More Than Eight Hours In Any One Day Or Forty- 
Eight hours In Any One Week. The Time When The Work 

1 In the following outline the word "shall" and the larger type in- 
dicate these provisions which are of the most vital importance. 



432 SELECTED ARTICLES 

Of Women Employees Shall Begin And End And The Time 
Allowed For Meals Shall Be Posted In A Conspicuous Place In 
Each Work Room And A Record Shall Be kept Of The Over- 
Time Of Each Woman Worker. 

2. Half Holiday On Saturday. Observance of the half-holi- 
day should be the custom. 

3. One Day Of Rest In Seven. Every Woman Worker 
Shall Have One Day Of Rest In Every Seven Days. 

4. Time For Meals. At Least Three-Quarters Of An Hour 
Shall Be Allowed for a Meal. 

5. Rest Periods. A rest period of ten minutes should be al- 
lowed in the middle of each working period without thereby in- 
creasing the length of the working day. 

6. Night Work. No Women Shall Be Employed Between The 
Hours Of Ten P. M. And Six A. M. 

II. Wages 

1. Equality With Men's Wages. Women Doing The Same 
Work As Men Shall Receive The Same Wages With Such Pro- 
portionate Increases As The Men Are Receiving In The Same 
Industry. Slight changes made in the process or in the arrange- 
ment of work should not be regarded as justifying a lower 
wage for a woman than for a man unless statistics of produc- 
tion show that the output for the job in question is less when 
women are employed than when men are employed. If a dif- 
ference in output is demonstrated the difference in the wage 
rate should be based upon the difference in production for the 
job as a whole and not determined arbitrarily. 

2. The Basis Of Determination Of Wages. Wages Should Be 
Established On The Basis Of Occupation And Not On The 
Basis Of Sex. The Minimum Wage Rate Should Cover The 
Cost Of Living For Dependents And Not Merely For The In- 
dividual. 

III. Working Conditions 

1. Comfort And Sanitation. State labor laws and industrial 
codes should be consulted with reference to provisions for com- 
fort and sanitation. Washing facilities, with hot and cold water, 
soap and individual towels, should be provided in sufficient 
number and in accessible locations to make washing before meals 
and at the close of the work day convenient. 

Toilets should be separate for men and women, clean and ac- 
cessible. Their numbers should have a standard ratio to the 



PROBLEMS OF LABOR 433 

number of workers employed. Workroom floors should be kept 
clean. Dressing rooms should be provided adjacent to washing 
facilities, making possible change of clothing outside the work- 
rooms. Rest rooms should be provided. Lighting should be ar- 
ranged that direct rays do not shine into the workers' eyes. 
Ventilation should be adequate and heat sufficient. Drinking 
water should be cool and accessible with individual drinking 
cups or bubble fountain provided. Provision should be made 
for the workers to secure a hot and' nourishing meal eaten out- 
side the workroom, and if no lunch rooms are accessible near 
the plant, a lunch room should be maintained in the establish- 
ment. 

2. Posture At Work. Continuous standing and continuous 
sitting are both injurious. A seat should be provided for every 
woman employed and its use encouraged. It is possible and 
desirable to adjust the height of the chairs in relation to the 
height of machines or work tables, so that the worker may 
with equal convenience and efficiency stand or sit at her work. 
The seats should have backs. If the chair is high, a foot rest 
should be provided. 

3. Safety. Risks from machinery, danger from fire and ex- 
posure to dust, fumes or other occupational hazards should be 
scrupulously guarded against by observance of standards in 
State and Federal codes. First aid equipment should be pro- 
vided. Fire drills and other forms of education of the workers 
in the observance of safety regulations should be instituted. 

4. Conditions Needing Correction. Work can be more 
efficiently done by either men or women if healthful conditions 
are established. It is usually possible to change conditions so as 
to remove such hazards to health as the following: 

A. Constant standing or other postures causing physical 
strain. 

B. Repeated lifting of heavy weights or other abnormally 
fatiguing motions. 

C. Operation of mechanical devices requiring undue 
strength. 

D. Exposure to excessive heat or excessive cold. 

E. Exposure to dust, fumes, or other occupational poisons 
without adequate safeguards against disease. 

5. Prohibited Occupations. Women Must Not Be Employed 
In Occupations Involving The Use Of Poisons Which Are 
Proved To Be More Injurious To Women Than To Men, Such 



434 SELECTED ARTICLES 

As Certain Processes In The Lead Industries. Subsequent 
rulings on the dangerous trades will be issued. 

6. Uniforms. Uniforms with caps and comfortable shoes 
are desirable for health and safety in occupations for which 
machines are used or in which the processes are dusty. 

IV. Home Work 

i. No Work Shall Be Given Out To Be Done In Rooms 
Used For Living Or Sleeping Purposes Or In Rooms Directly 
Connected With Living Or Sleeping Rooms In Any Dwelling 
Or Tenement. 

V. Employment Management 

i. Hiring, Separations And Determination Of Conditions. 
In establishing satisfactory relations between a company and its 
employees, a personnel department is important charged with 
responsibility for selection, assignment, transfer or withdrawal 
of workers and the establishment of proper working conditions, 

2. Women In Supervisory Positions. Where women are 
employed, a competent woman should be appointed as employ- 
ment executive with responsibility for conditions affecting 
women. Women should also be appointed in supervisory posi- 
tions in the departments employing women. 

3. Choice Of Occupations. The opportunity to choose an 
occupation for which one is best adapted is important in safe- 
guarding health and in insuring success in the work to be done. 

VI. Cooperation of Workers In Enforcement 
of Standards 

1. The Responsibility Should Not Rest Upon The Manage- 
ment Alone To Determine Wisely And Effectively The Condi- 
tions Which Should Be Established. The Genuine Cooperation 
Essential To Production Can Be Secured Only If Definite Chan- 
nels Of Communication Between Employers And Groups Of 
Their Workers Are Established. The Need Of Creating Meth- 
ods Of loint Negotiation Between Employers And Groups Of 
Employees Is Especially Great In The Light Of The Critical 
Points Of Controversy Which May Arise In A Time Like The 
Present. Existing Channels Should Be Preserved And New 
Ones Opened If Required, To Provide Easier Access For Dis- 
cussion Between Employer and Employees. 



INDEX 



Absenteeism, 413-14 

Adams, Brooks, 5 

Adjustment of differences, 362 

American Federation of Labor, 27,- 

28, 186, 236, 237, 286, 289, 347, 

350-1 
American labor movement, 32 
Anthrax, 380, 396 
Anti-strike legislation, 32 
Apprenticeship rules of unions, 200 
Arbitration, Compulsory, 396 
Associations of employers. See 

Employers' associations 
Association, Right of, 356 
Australian system of dealing with 

labor disputes, 272-8 

Bargaining, 78; See also Collec- 
tive bargaining 

Beeby, George, 272 

Bell, George L., 306 

Bloomfield, Meyer, Introduction, 
i-3 

Brandeis, Louis D., 262 

Bonus systems, 87, 89-96 

British Labor Party, 370 

Capital, 16 

Capitalism and social discontent, 

203-12 
Causes of friction and unrest, 35 
Causes of strikes, 269-72 
Child labor, 35L-379-80, 384, 39^-5 
Closed shop, 193-5, 238-40, 243-55 
Cole, G. D. H?T*T$8 
Collective bargaining, 6, 34, 212-36, 

230^ 297, 351, 352, 360, 428; 

Ethics of 215-20; In glass bottle 
• industry, 220, 272 
Commission on Industrial unrest, 

(British), 370 
Common people's union, 255-61 
Commons, John R., 396 
Compulsory arbitration, 396 
Conciliation, 366 
Conciliation boards, 21 
Contract, Freedom of, 356 
Cost of living, 33, 36, 51-75, gq- 

102, 302, 401; Measurement of, 

56-68 
Cost of production, 79-82 
Council of National Defense, 303 
Courts, Attitude of, 290-300 
Credit, Control of, 29 
Creed, A new industrial, 373-4 

Demands of labor, 42-50 
Dennison, Henry S-, 120, 352 
Dismissal wage, 171 
Distribution of earnings, 18-19 



Eight-hour day, 139-43, 272 
Eliot, Charles W., 123 
Emerson bonus plan, 93-4, 95 
Employee representation, 351, 370-2 
Employment agencies, 378 
Employment, Continuity of, 413-14; 

Security of, 403-4 
Employers' associations, 20, 409-10 
Employer's viewpoint of trade 

unionism, 187-203 

Family budgets, 61, 62, 63, 64, 65, 

66 
Feiss, Richard A., 150 
Fisher, Irving, ^76 
Fitch, John A., 97, 153 
French Revolution, 69 
Frey, John P., 42, 286 

Gantt task and bonus system, 91 
Garton foundation, 7 
Gary, Elbert H., 236 
Gompers, Samuel, 27, 301 
Government employes, 366 
Grievances of workers, 11-12 
Groat, George G., 290 
Group insurance, 324-31 

Halsey Premium plan, 89 

Health insurance, 175, 314-24, 337 

Hoagland, H. E., 245 

Hobson, J. A., 215 

Hours of work, 36, 38, 41, 42, 139- 

67, 356, 378, 382-7, 431-2 
Housing 339-45 
Howard, Earl D., 278 
Hoxie, Robert F., 87 

Ihlder, John, 339 

Incorporation of trade unions, 262- 
7 

Index number wage, 68-75 

Industrial councils, 24, 25; hous- 
ing, 346; insurance, 313-31, 332; 
Parliament, 50; physiology, 416 

Injunctions, 29 

Instincts of workers, 376-8 

International labor code, 378-96; 
labor office, ?86-8 

Joint committees, 22 
Jurisdictional disputes, 189 

Kimball, H. W., 324 

Labor as a commodity, 78; New 
labor code of the world, 378-96; 
Labor cost, 79-82; demands of, 
42-50; Function of, 16; Place- 
ment, 339; Proposals at Presi- 
dent's Conference, 349-50; Un- 
rest, 35 



436 



INDEX 



Labor's Bill of Rights, 27 

Lapp, John A., 316 

Laughlin, J. Laurence, 203 

Leacock,. Stephen, 309 

Lead poisoning, 392 

Limitation of output, 8-1 1, 13, 31, 

191, 301-6, 398, 402 
Lockout, Right to, 357 

Match manufacturing 395 
Management, Function of, 16 
Medical examination of employees, 

3I3-I5 

Meeker, Royal, 175, 331 

Methods of compensation, 77-123; 
See also Index number wage, 
wages, wage methods 

Minimum wage, 135, 272 

Ministry' of Labor (British) re- 
port, 370 

Morrison, C. J., 139 

National Industrial Tribunal, 363 
National War Labor Board, 56, 57, 

62 
Newman, Bernard J., 413 
Night work, 167-9, 390-5. 43^ 
Non-union shop, 243-55 

Occupational hygiene, 413-18 

Ogburn, W. F., 56 

One big union, 286 

Open shop, 238-40, 243-55, 357 

Output, 83 

Overtime, 351 

Payment by results, 109-11 

Peace Treaty, Ratification of, 30, 
31 

Perkins, George W., in 

Piece work, 83-6 

Post, Louis F., 5 

President's industrial conference, 
349-59; Second industrial con- 
ference, 362 

Price, Theodore H., 68 

Principles, underlying solution of 
labor problems, 13-14 

Production, 7, 16, 48, 301-12, 353-4 

Profiteering, 301, 303, 305, 399 

Profit sharing, 37, 11 1-34; Objec- 
tions to, 116, 120, 133-4 

Protocol, 278, 282 

Public ownership, 6 

Public utilities, 366 

Railroad brotherhoods, 125; Em- 
ployees, 73-5; Operation, 30; 
Wage commission, 56, 57 

Rate cutting, 84, 85 

Reconstruction, 5, 57 

Regional Boards of Inquiry and 
Adjustment, 363-6 

Restriction of output. See Limi- 
tation of output 

Rights, Labor's Bill of, 27 

Rochdale system, 34 

Rockefeller, John D. Jr., 368 

Ross, Edward A., 171 

Rountree, B. Seebolm, 35 

Rowan Premium plan, 90 



Schereschewsky, J. W., 313 

Scientific management, 85, 192-3, 
405-6 

Settlement of disputes, 356 

Shipbuilding Labor Adjustment 
Board, 56, 57 

Shop councils, 352, 370-2 

Shorter workday, 139-67 

Sickness insurance, 314-24; Prob- 
lem of, 413 

Six-hour day, 161-7 

Smith, Adam, 68 

Socialism, 47, 77 

Socialists, 218, 269 

Social insurance in United States, 
331-8 

Socialization of natural resources, 
6 

Speeding up, 306 

Stabilizing the dollar, 399-400 

Standard of living, 33 

Standards, 429-34 

Standardization, 312 

Stoddard, Lothrop, 255 

Stone, N. I., 77 

Stove making industry, 43 

Strike, Right to, 25, 32, 357 

Sullivan, J. W., 359 

Sympathetic strike, 188, 358 

Syndicalism, 47 

Taff Vale Railwav case, 264 
Taft, W. H., 212* 
Taussig, Frank W., 51 
Taylor, Frederick, 84 
Tenure of employment, 171-84 
Trade jurisdiction, 286 
Trade unionism, 185-267, 283 
Trade unions, 19, 20, 25, 359 
Training of workers, 358 
Transportation problems, 339 

Unemployment, 37, 175-84, 387-9 
Unemployment insurance, 38, 178- 

80, 379 
Union label, 261 

Unionism. See Trade unionism 
United Mine Workers of America, 

33 

Van Kleeck, Mary A., 419 

Wage boards, 273 

Wage methods, 77-123 

Wages, 36, 102-7, 284, 355; of 
women, 432; And cost of living, 
52, 99-102; Wages fund, 8 

War Labor Board, 369 

Webb, Sidney, 135 

Week work, 83 

Whitley report, 25, 369; Commit- 
tees, 218; Councils, 37, 50 

Woll, Matthew, 342 

Wolman, Leo, 220 

Women in industry, 351, 379, 389- 
92, 419-34 , 

Working conditions, 37 

Workmen's compensation, 333-7 

Works committees, 23, 24 



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